The year 2020 presented us with unique challenges. Never has a singular event had such wide-ranging repercussions as the Covid pandemic.
It has touched nearly every area of our lives. Schooling, socializing, family gatherings, travel, and more. And the restraints from social distancing and restrictions implemented to slow the spread of Covid remain in place.
Have you been able to find the good things that have come out of a bad situation? Have you had more time with family and strengthened relationships? Started new family traditions? Taken on new hobbies? Found new interests? Often your perspective can change the way you see the world. You can choose to see what is right with the world.
It wasn’t just our daily routines that were impacted. The economy and our investments saw unprecedented swings in 2020.
Yet, we are an optimistic nation. As the economy was set to climb out of a deep hole, investment legend Warren Buffett said, “I remain convinced…nothing can basically stop America. The American miracle, the American magic has always prevailed, and it will do so again.”
Last year’s strong finish for stocks suggests Buffett is on the right track.
As we enter a new year, we tend to look back at our successes, our challenges, and new goals for the upcoming year. Without a doubt, we all faced challenges in 2020. But I believe we can all herald personal victories, too.
I’m convinced most of us are hopeful as we look to 2021. I know I am.
New Year’s resolutions are one tool that offers us guideposts as we begin the cycle anew. Surveys say that more than half of adults make resolutions–yet, we know far fewer keep them.
The top two resolutions center on money and health. My goal is to keep things simple and realistic, focusing on resolutions for your finances.
I’ll offer you options. Some may seem simple, but the foundation of any financial plan must be built on the basics, the fundamentals.
Some may apply to you. Others may not. But I encourage you to grab ahold of what is realistic.
Financial G to get you started in 2021
- Make a budget. Not in the way that many people think of a budget where you track where you spent your money. This is called accounting. I am talking about creating a budget that is a plan on how you are going to spend your money in the upcoming month – in other words create your spending plan. Ensure that the spending plan that you create is aligned with your goals. Creating a spending plan for your money that is linked to your goals is one step. Just as important, you also need to make sure that you are sticking to the plan that you created.
- Establish an emergency fund. Nearly 30% of Americans don’t have savings for an emergency. Six months of expenses as your emergency fund is optimal, but if you still have non-mortgage debt? then I would have a minimal emergency fund – around $1,000 and focus on paying off debt ASAP so that you can build up your emergency fund so that you have six months’ worth of expenses set aside in the event of an emergency.
- Pay down and pay off debt. You’ve created a spending plan, but debt continues to weigh on you like an anchor around your neck. You know the feeling. Cut up your credit cards. Pay more than the minimum balance and focus on high-cost debt first. When one card is paid off, put that payment towards your next loan. You’ll be surprised at the headway you’ll make. And one more thing. When you’ve paid off a loan, reward yourself. Simple rewards are excellent incentives that keep you on track to the top of your summit.
- Start or increase saving for retirement. Out of debt? Have at least a 3 months emergency fund? Then it is time to ramp up your saving for retirement. Maybe you don’t think you can afford it. But let’s view this from another angle. When an unexpected bill comes in, we always seem to find a way to pay for it. If your car breaks down, you know you’ll need to get it repaired. Look at retirement as your car that needs to be fixed. One easy way is to sign up for automatic drafts into your 401k or IRA. Try to save at least 15% of your income for retirement. Does that goal seem out of reach? Then start with a lower amount (but challenge yourself) and make increases every 3 – 6 months until you reach your goal percentage. Get a raise how much of your raise can you put towards your retirement savings?
- Contribute to a cause near and dear to your heart. Consider incorporating regular financial gifts toward your favorite charity or charities. Can you set up an automatic draft? If so, even a few dollars each month means you will be making a difference. Or, you may choose to volunteer your time.
- Get your affairs in order. Finish setting up a will or trust, update your beneficiaries, update life insurance, and consider a living will. A living will reflects your preferences to close family or friends regarding end-of-life medical treatment. Also, consider a durable power of attorney, which allows someone to make health-care decisions for you if you are incapable of doing it yourself.
The goals are simply guidelines and suggestions. Does it seem overwhelming? Then focus on one or two. As we always remind you, I am here to assist you, encourage you and point you in the right direction. If you have questions, I am no further away than a phone call or email.
Fight on Wealth Warriors!!!
Fighting for your wealth along your side