New [Money] Goals for the New Year

The new year has officially started and I’m not sure about you, but I couldn’t be more grateful. 2020 was filled with a lot of unexpected events and stress. Although many of us found ways to remain grateful and achieve things we are proud of, I’m glad 2020 is over and am really looking forward to this new year.

At the start of each year, I always make a list of goals I want to accomplish. This year is no different. One of the main categories of things I plan to improve in 2021 are my finances. If you’re also thinking of improving your finances in 2021, here are some money goals to consider:

1. Cut back on unnecessary expenses. I realize this sounds vague but for me it’s all-encompassing. Although I did a good job in 2020 saving and investing money in separate accounts, one the things I want to do better in 2021 is spend less money on things I don’t need. Although I do plan to enjoy my life, I want to be more diligent with my discretionary spending. Particularly, when it comes to my love for wine and guilty pleasure of buying new clothes. Do you also feel you should spend less money on unnecessary things in 2021? If so, what things do you think you can cut back on? What kind of plan are you going to put in place to ensure that you follow through on this goal?

2. Pay off one of my debts. One of my life goals is to become completely debt free. Although paying off all of my student loans (or getting them forgiven) may be a long way away, one of the things I plan to do in 2021 is pay off at least one of my debts. Since I bought a slightly used car a year ago, one of my goals has been to pay it off relatively quickly-which I should be able to do next month. What about you? Do you have a car loan, credit card balance, or student loan that you can attempt to pay off in 2021? If so, consider putting a plan in place so that you can achieve this goal by the end of the year.

3. Establish additional revenue streams to increase my income. 2020 reminded us that our jobs and our current incomes can change. One of the things I want to do in 2021 is become more financially secure by increasing my current income. Although an increase in salary is dependent on my job and other forces I can’t control, one of the things I can control is money that I make outside of my job. For me, that means making more money from blogging or working extra shifts at other medical facilities for added income. For you, it may mean, finding a way to monetize your hobbies and make additional revenue outside of your day job. Creating other income sources gives you more financial protection, allows you to save more money, and makes you less reliant on your day job. Are there additional revenue streams you can explore this year?

4. Save money for a large purchase or fun trip. 2020 taught us that life is unpredictable. Since our health and lives can change, one of my 2021 goals is to enjoy my time off from work more by doing something that makes me really happy: traveling. Since I didn’t get to travel nearly as much as I had planned to last year, in 2021 I plan to make up for lost time, if possible. One of the ways I’m preparing for this is by saving even more money from each check into a “vacation fund” so that I can travel to various places without incurring debt. What about you? Do you plan to travel somewhere in 2021? If so, perhaps you too should start saving even more money into a travel fund. If travel isn’t as important to you, is there an expensive item or gadget that you’ve wanted to purchase?

5. Invest more money by contributing more to retirement. Along with decreasing my debts and saving up money to enjoy a nice trip, I also want to increase my net worth. The two main ways to increase your net worth is to lower your liabilities (aka pay down debt) and increase your assets (purchase things like stocks, real estate, or business that allow your money to increase in value). One of the ways I plan to increase my assets is by investing more money in my retirement accounts, especially my Roth IRA. Contributions in Roth accounts grow and are withdrawn tax free which serve as a huge advantage when I take the money out in retirement. By contributing more to retirement via these Roth accounts, I can invest more money in index mutual funds (which are groups of thousands of different stocks) in a tax efficient manner. This will allow my money to make even more money over time, which will increase my net worth. Are you planning to contribute more to retirement this year?

6. Give more money to charity. One of the things that surprised me last year was how much joy I got from giving. Whenever I sent money or bought someone a gift, I would think of the person’s reaction to the gift or be reminded of how much I was helping someone else and instantly be filled with happiness . As a physician, I’ve been blessed in many ways and one of my 2021 goals is to give more and “pay it forward” to others. Tell me, have you thought about giving more to others? If so, what type of gifts or contributions are you planning to make in 2021?

Tell me, what are some of your 2021 money goals?

New Goals for the New Year

1. Increase retirement investments. As young professionals who will eventually retire or cut back on work at some point, we need to start investing towards our future. While many of us may already have started setting aside money for retirement, others of us may not have begun that process. In 2020, let’s strive to do even more. Let’s commit to increasing our retirement savings, even if it’s by a small amount. As we continue to set aside more money for retirement, we will have a greater amount of money invested which will allow the magic of compound interest to work in our favor and increase our net worth.

2. Save more of my income. In addition to investing more money for retirement, I am also striving to save more in general in 2020. In addition to saving up money for vacations and large purchases, we should also have a certain percentage of our income in an emergency fund and for unexpected expenses. While some people may choose to save all additional funds in retirement accounts, I plan to keep a certain percentage of money “liquid” or saved outside of retirement accounts just in case I need to access it at a later date. It’s difficult to take money out of retirement accounts before you reach your mid-50s, so having money saved in a more accessible account is ideal for those of us who may be a bit younger.

3. Live below my means. As I enter in 2020, my goal is live below my means. Instead of buying things because I can afford them or living the doctor lifestyle I envy, I’ve chosen an alternative path: practicing self-control. I share an apartment with a roommate, which allows me to save money on housing costs and other bills. I have a budget for food that I adhere to each month. I also refrain from going to the mall unnecessarily or buying things I want simply because they’re “on sale.” Learning to live below my means has helped me become less materialistic and allowed me to save more, invest a greater amount, and be better prepared for any unexpected events. It has also prevented me from buying things to impress those around me. Instead, I’m focused on my own financial goals which will allow me to make even greater progress toward financial independence.  

4. Pay off bad debt. Before I became financially literate, I made some costly mistakes. I used credit cards to purchase things I didn’t need. I moved to a city I couldn’t afford and failed to live on a budget. I also didn’t save much of anything, for retirement or for emergencies. Now that I’m older and wiser, I have sought to right these wrongs. You might be doing the same thing as well. As we enter this new decade, lets strive to get rid of credit card debt and car loans and refrain from accumulating more. The quicker we get rid of high interest debt, the sooner we can increase our cash flow each month and have more money to invest.

5. Give money to charity. Along with spending money on ourselves and saving money for the future, my goal is to give more. It can be easy to focus on my own priorities but giving allows us to improve the lives of others. Whether it’s paying tithes to the church or increasing charitable donations, giving is a self-less act that allows us to make a difference in the lives of people with real struggles and financial hardships. Although I’d love more money for myself, I recognize that I’ve been blessed beyond measure and should actively seek to pass that grace onto others.

Tell me, what are some of your financial goals for the new year?