I don't know about you, but I'm ready for 2021 to be over so we can move on to bigger and better things. A lot of the goals I set for myself in 2020 ended up not being achievable due to the pandemic. I was lucky enough to stay employed, so my financial goals mostly stayed intact, though a few changed. My vacation was canceled, so I focused on building up my savings, for example. But now it's time to look at some New Year's Financial Goals for 2021.
Start a Challenge
If a big new year's financial goals aren't for you, how about starting a savings challenge? This can be a great way to grow your savings, either for an emergency fund, for an upcoming purchase, or just to set aside money for a later purpose. I've written about quite a few challenges, so there's probably one here to fit you.
- 52 Week Reverse Savings Challenge
- 60 Day Money Challenge
- The Paper Money Savings Challenge
- New Year's Savings Challenges
Review your Retirement Funds
Retirement feels very far away right now, but that doesn't mean I'm not planning for it. One of my New Year's financial goals is to review my current retirement investments and make adjustments where I can.
Do you have a retirement account through work, such as an IRA or 401k plan? Does your employer offer any sort of contribution match? If so, you should absolutely prioritize contributing up to that match. It's free money. Even if your retirement accounts end up dropping by 25% (they won't), you will still end up ahead because of that money contributed by your employer.
If you're already contributing to the match, consider whether or not it's a good time to increase your contributions. Remember, these contributions are pre-tax, which means that even though you may increase your contribution by $100 a month, your take-home pay will shrink by less than $100. What may not have a huge impact now will have a big impact later.
Pay Down Debt
Sometimes, taking a look at your debt can be incredibly overwhelming. Whether it is consumer debt, education debt, or mortgage debt, sometimes those numbers can be stressful. Maybe your debts are too high to pay off in one year, and that's okay. There's absolutely no way I could pay off my mortgage in a single year unless I win the lottery, and since I never buy lottery tickets, the odds are low. That said, I can still look at ways to reduce my costs. Right now, mortgage rates are low. I refinanced in November, but maybe one of your goals in 2021 can be to look into refinancing your mortgage. We were able to cut two years off of our mortgage while still saving about $50 a month. While that $50 a month doesn't feel like a lot, two full years of the mortgage is a significant amount of money.
Maybe you want to try to put some extra money towards your debts. If you're worried, start slow. Increase your monthly debt reduction payments by $25 and see where you can ramp up. Every little bit you can pay now reduces the amount of interest you will ultimately end up owing.
Save for Something You Want
We all know how important it is to save money for things like home repairs, major home improvement projects, other necessities. But it can be so easy to forget to save for the fun things you want. And these don't have to be big things like a new car or a fancy vacation. Maybe there's a gaming system you really want. Maybe you've seen your friends playing Animal Crossing and want to get your own Nintendo Switch to play as well. Maybe you want to splurge on a new pair of shoes or go on a shopping spree at your favorite store. These might not even be huge expenses, but you just can't bring yourself to drop $150. Set aside a little bit of that money every month and treat yourself. I'm a firm believer that every budget needs a little bit of fun money, even if it's just $10 a month. Yes, it can be tempting to throw every penny at your debt, but so many times, that leads to frustration and overspending. Make sure your New Year's financial goals have something prioritized for you.