The end of the year is an excellent time to assess your financial position and make plans to change it if you’re not pleased with what you uncover. Whether you’re a multi-millionaire or a multi-dollar-aire, there are always tweaks you can make to put your future self in a better financial position. Here are 21 personal finance resolutions to make in 2021 that can completely change the trajectory of your financial future.
The Main Thing About Personal Finance Resolutions
The most important aspect of any resolution is to recognize that the time will pass either way. Whether you choose to clean up your finances and create an emergency fund or continue to live in your paycheck to paycheck existence, the time will pass, and life goes on. So it’s ultimately up to you whether or not you’d like to look back on 2021 as a year where you learned a ton and completely changed the financial future of you and your family or one that you squandered away on senseless spending.
Get Clear on Long-term Financial Goals
Determining goals is a pretty logical place to start as you can’t work towards something if you don’t know where you’re going. This might be a good task to do with your partner if you have one. Think about things like how much you need to save for retirement, any short-term financial goals like buying a home, or what types of investments you’d like to have a hand in down the line.
Track Spending and Review it Monthly
Logging every dollar you spend can be tedious, but it’s also one of the best ways to get a grip on where your money is going. If you’ve not tracked before, you may be shocked at the trends you might uncover. For me, the category that makes me cringe has been and likely always will be food. The only way I can create an action plan to reduce my spending is to log every time I go to the grocery store and sit down to review my purchases each month.
Set up a Recurring Contribution to a Retirement Plan
Your recurring contribution might be your company’s 401(k) or 457 or a personal Roth IRA. And the beauty of this resolution is you can do as much or little as you need, as long as you start. $5 per paycheck into a retirement account is a step in the right direction and will set you up better for retirement than you might have otherwise. You can always add more later if you find you aren’t missing the money after all.
Listen to One Personal Finance Podcast Weekly
Personal finance is a journey, and a great way to speed it up is by gathering as much information as possible. Podcasts are fantastic sources of knowledge, especially if you’re an auditory learner. Check out some of my favorite personal finance books and podcasts if you’re not sure where to start.
Commit to Reading One Personal Finance Book a Month
If you do this, you’d have twelve books of personal finance knowledge in your brain by the end of the year. And I’m certain you could do a lot with that information. Check out books related to specific topics if you’re interested in one aspect of personal finance like real estate investing* or index funds*.
Create a Debt Repayment Strategy and Implement it
Debt can hold you down from pursuing the more exciting aspects of financial wellness like investing. The most critical part of paying down debt is creating a plan and executing on it. Layout all your debts, consolidate if you need to, and then decide whether you’ll use a snowball or avalanche approach to pay it off.
Start (or Finish) an Emergency Fund
An emergency fund is a vital component of any personal finance picture. I won’t drone on as you can read my existing post about my thoughts on emergency funds and how to create one.
Project Your Big Expenses for 2021 & Plan Savings
If you know that you plan to replace the deck this Spring or you’d really like to move forward with the shower renovation, come up with a reasonable amount for those projects and create a plan to save the money ahead of time. If you plan on shelling out $5,000 in July, saving about $833 a month for the first six months of the year would enable you to make the payment in cash instead of using debt.
Set up a Meeting with a Financial Planner
Getting on the same page about finances with your partner is great, but sometimes having another set of eyes review your financial situation can point out opportunities you’ve missed. Many financial planners offer a free consultation, so take time to schedule an appointment with one in your area who you trust. Asking friends and family for referrals can be a great way to develop a list of reputable planners in your area.
Do a Deep Dive on Insurance Coverages
This is probably the least fun resolution, but it could pay off by way of savings. List out all insurance policies you have, including homeowners, life insurance, auto insurance, disability, etc. Then find the terms of each policy and see if you truly need what you’re paying for.
For example, you might be able to save on auto insurance if you’re still paying full coverage on a vehicle that’s worth a fraction of its original value. My husband just reviewed our homeowners policy and found that we can raise a few deductibles to a still comfortable level and save a few hundred dollars annually in the process.
Create or Update Your Will
Especially if you have a family, having a will in place is an integral part of the estate planning process. I know it can be hard to fathom if you’re young, but it removes much of the burden from your family after you pass if they can execute your wishes as you left them.
Review & Update Your Beneficiaries
If you’ve made a recent life change like marriage or divorce or had a death in the family, it’s a good idea to go through your investments and insurance policies and update your beneficiaries. The last thing anyone wants to uncover is that their life insurance policy is still tied to an ex-spouse after they’re remarried.
Check Your Credit Report
You can access your credit report from each of the three major reporting bureaus (Experian, Equifax, and TransUnion) each year for free. Take a minute to pull the reports from each bureau now or set calendar reminders to check them throughout the year. Accessing your credit report can alert you to any fraudulent activity and give you the chance to correct errors with creditors before they negatively impact your access to credit or employment.
Set Up a “Fun” Fund
When your excitement about doing better financially is high at the beginning of the year, it’s easy to want to cut out all discretionary spending. But the reality is, we all need to live our lives, and that costs money. Instead, try and set aside money from each paycheck in a fun fund to use for whatever you or your family want to do each month. If you don’t use it, roll it over for an even more fun adventure next month.
Start a Side Hustle
You might not be interested in becoming a freelance writer like me, but that doesn’t mean there aren’t ample opportunities to earn income outside of your full-time employment. Discover options for extra income that you can do in your spare time. Bonus points if you commit to using any side hustle income to go towards debt repayment or building your emergency fund.
Sign up for Identity Theft Protection
In our digital world, identity theft is, sadly, becoming a more common occurrence. Consider purchasing an identity theft protection policy if you’ve got an extensive digital footprint. Identity Guard and LifeLock are a few of the many great companies working to protect consumers in the digital realm.
Finish and Pay Taxes Before April
Some people allow the burden of tax day to weigh on them like a stone when it comes the same time every year! Let this be the year you get yourself organized and either do taxes yourself or meet with a financial professional early. I promise the benefit of getting this off your mind will make the spring season so much more fun!
Clean out the Closets & Sell What you Don’t Need
It seems like accumulating extra stuff happens in the blink of an eye. The closet in the spare bedroom that was empty is now bursting at the seams before you know it. Schedule a weekend to go through your extra items and plan to sell things you don’t need. Poshmark, Facebook Marketplace, and your local secondhand store are all great options that allow you to earn an extra buck instead of throwing things away.
Review Subscriptions & Cancel What You Don’t Need
Subscription services are on the rise in an insane way. It’s incredibly easy for companies to make money since whatever you signed up for, toothbrushes, clothing, or jewelry, is going to keep coming to your door until you cancel. If you’ve been using a service like StitchFix for a while and you realize your closet is full, maybe it’s time to put the subscription on pause and use the savings to put towards paying off student loans.
Calculate Your Net Worth
Net worth can give you a good idea of where you stand financially. Check out this post on the importance of calculating your net worth for more details.
Rebalance Your Portfolio
The end of the year is a great time to reassess the balance of your asset allocation. If certain investments under or overperformed, you’ll want to reset by selling off or purchasing more shares of certain investments to keep your strategy intact.
Plan Your Reward for Good Financial Behavior
Making gains in personal finance can sometimes feel like fighting an uphill battle. It’s important to celebrate small successes along the way without breaking the bank. Plan out the reward you’ll have when you pay off your car or finish your emergency fund. It might be a nice bottle of wine and a homemade meal with your partner or a day trip to go hiking in the mountains. Whatever it is, just make sure you aren’t going back into debt to pay for it!
There you have it, 21 personal finance resolutions you can make to be certain next year will be the best yet. Did you make personal finance resolutions that others may benefit from? Leave me a comment and let me know!
Like what you’ve read? Want to stay updated on future posts? Sign up below to receive my weekly newsletter and access my weekly meal planner printable for free!