Broker Check
How to Set Financial Goals for 2021

How to Set Financial Goals for 2021

December 28, 2020

Are you ready for a new year? You're not alone, 2020 has proven to be a challenging year for many of us. Now is the time to review everything and start planning your financial goals for the coming year. Here are 6 areas you might want to look at for 2021.

1. Your Annual Budget

Now is the perfect time to review your expenses. Take a look at all the changes that have happened this year in your financial life and start working on a budget for 2021. Did you start a new job? Get married or divorced? Purchase a new home? There are countless events that could impact your savings and expenses.

Take a look at the entire year and review what worked and what didn't work for you and your family. Consider your short-term goals as well as the impact decisions have on long-term objectives.

2. Financial Goals

Personal finance is often part of new year's resolutions. Take a look back at your 2020 goals and see what progress you made. Did you need access your emergency savings or incur debt? Or maybe lifestyle changes allowed you to increase retirement savings. After you have reviewed your goals, start prioritizing 2-3 goals for 2021. Make any adjustments needed and find a way to keep yourself accountable - write them down, share with a spouse, friend, or advisor.

3. Insurance Coverage

It is easy to overlook all the insurance policies you need - life insurance, health insurance, home insurance, auto insurance, and more. Take the time to review your coverage and see if it remains appropriate for you and your family right now. If there have been changes in your life or you haven't assessed your insurance in a while, you might find you need to update coverage to better protect you, your loved ones, and your assets.

4. Savings Accounts

Most people should have 3-6 months of expenses set aside in savings for emergencies. This is in addition to savings for other goals. Review your savings accounts and see if you need to make any additions in 2021. This is also a good time to look at savings accounts interest rates and see if there are better options.

5. Investment Accounts

Whether you are a new or experienced investor, it is critical to review your investment portfolios to make sure your financial goals are on track. If you are planning a major purchase in 2021, review your timeframe and liquidity needs. Assess your risk tolerance to see if you need to make any changes based on your resources, earnings, philosophy, phase of life, and personal financial goals. Ensure that your expected returns are reasonable and apply appropriate tax and inflation adjustments. If you are taking distributions, review your spending and distribution rates.

6. Estate Planning

Take a look at your estate planning documents and make sure everything is clearly defined. Work with an estate planning attorney to make sure that everything is properly documented and make any changes if necessary. 

Financial planning should grow and change with your life. It is important to review and understand your financial decisions to make sure you are on the right path. A financial advisor can help you align your goals and strategies, reach out today.