Whether or not you’re a New Years Resolutions person, it’s helpful to set some goals for any period of time. They don’t have to be in January… heck, set some in May and switch it up!
The point is, that you set some goals, create a plan and take the necessary action to achieve them.
Not only because you owe it to yourself, but because it feels amazing when you crush that goal!
One of the top 10 most common new year’s resolutions in fact, is around finance.
Usually saving more or spending less, and 2021 should be no different. With Canadian’s reporting a 10% increase in household income in 2020 – yes, you read that right – INCREASE, the average Canadian should be entering 2021 ahead of the game. Despite the pandemic, government support in the hands of Canadians helped to drive household income up, household spending down, and many people were able to make a dent in their consumer debt as well as increase their savings.
So how do you keep that going through 2021?
Your finances may look different for 2021, so here are some tips to setting and achieving your 2021 financial goals.
- Be prepared.
It’s true that 2020 put a lot of people ahead of the game, but if you were one of the millions receiving the CERB benefit, be prepared come tax time that you may have to pay something. Remember, that $2000 from the Government of Canada was taxable, so avoid interest and penalties for late payments and be prepared to pay a bit of tax some tax time. If you want an idea of what that tax bill may look like, here’s a quick calculator to help.
- Be detailed.
When you’re writing your goals down (and ALWAYS write them down), be as detailed as possible. Instead of just saying that you want to be debt free, your goal should be that you “want to reduce the $10,000 credit card debt to $0 by December 31, 2021.” Be realistic, but don’t be afraid to stretch yourself either.
- Make a plan.
You know where you want to be, now it’s planning how to get there. This may be creating a budget, making financial sacrifices to allocate more money to your financial goals, or simply just learning more to help you get where you want to be. This is also where a financial professional can help.
- Take action.
The only way to achieve your goal, is to put your plan into action. This is where your commitment may be tested. If your plan requires a budget and you have to make some sacrifices, there’s no better time to do that then a pandemic when you can’t be as social as you would be normally. If you get deterred from your plan, don’t stress. Take a breath, and get back on course. It’s okay to take a beat and make an exceptional purchase, or eat out more often in a week than you would normally. Just always go back to ask yourself, “what do I want more – to reach my financial goal, or to spend my money on this?” Act accordingly.
- Crush your goal.
Final step is crushing that goal. And yes, you want to reach that goal within the timeframe you’ve set, but it’s okay if you don’t quite get there. Just make adjustments. Maybe you’ve only crushed $9,000 or your $10,000 credit card debt by December 31. Celebrate what you HAVE accomplished and keep going. Reward yourself when you crush your goal – you deserve it!
Financial Housekeeping
January is a good month for some financial housekeeping. Check your credit score to make sure there’s nothing on your report that shouldn’t be (Equifax and TransUnion).
Summarize your assets and liabilities so you know where your money lies and what you owe.
If you hold investments, you’ll receive a year-end 2020 statement. Don’t just toss it in a drawer, but instead take a look and see what your investment did in 2020. Did it perform as you may have expected? Do you have questions? Ask your advisor, or reach out for a complimentary review.
This year could be YOUR year to get ahead financially… just start by setting some goals.
Originally written as guest contribution to Retroscripts.