14 Tips To Meet Your Financial Goals In 2021

Who among us isn’t ready to bid good riddance to the year 2020? The pandemic has upended life across the globe and that includes creating financial chaos and stress for people of all walks of life. The good news is that 2021 is just around the corner. The bad news is that there will be pandemic fallout to deal with in the year ahead, and that could mean a continued rocky ride for your personal finances.

That doesn’t mean postponing or eliminating financial plans and goals altogether. And it doesn’t mean 2021 will be a bust. Instead, you’ll need to be more focused, savvy, and strategic about money goals in the coming year, which is why we asked financial experts across the country to weigh in and provide tips and insights about how to prosper financially in 2021 despite all the uncertainties that lie ahead.

Related: 19 Smart Ways to Get Through a Recession

Create a Rolling Budget

In times of uncertainty, it’s a good idea to create what’s known as a rolling budget, which is a budget that’s dynamic and changes throughout the year. This type of budget typically focuses on the near term, rather than the long term.

“You can’t always foresee every stumbling block in your financial future, so make sure to keep your budget bendable, not only judging the numbers you see at the moment but also make room for the surprises,” says Roy Ferman, founder and CEO of Seek Capital. “Keep a rolling budget and forecast that accounts for potential fluctuations — positive or negative.”

In other words, budget in a way that accounts for multiple real-world scenarios, says Ferman, creating a plan A, B, C, and possibly even D. “You want each plan fully mapped out as if it was plan A to keep you on top of any discrepancies. Allow yourself to come up with different variations, and allocate for those variations.”

Establish More Than One Stream of Income

Depending on how you define the data, anywhere from 20 million to 30 million people were unemployed or had their income affected by the pandemic, says Marco Sison, financial coach for Nomadic FIRE. To help protect yourself against the impacts of unemployment or reduced income, it’s a good idea to establish multiple streams of income.

“If one job or income stream is cut off, you still have other sources coming in to live off of,” says Sison. “Ideally, these income streams are passive: dividends, rental property, digital side businesses. If your hours get cut, or you lose your job, you can reduce your expenses and live off your side hustles without tapping your emergency fund.”

Budget for Saving

Warren Buffett has been quoted as saying “If you want to make saving a priority, take a look at how you budget. Do not save what is left after spending; instead spend what is left after saving.”

If you truly want to make saving a priority, particularly amid challenging economic times, you cannot plan to simply set aside what is left over, says Robert Johnson, a professor of finance, at Creighton University’s Heider College of Business. “You don’t successfully build wealth by simply taking what you have left after all your expenses,” says Johnson. “We accomplish what we prioritize. Prioritize savings and invest those savings. Saving should be a line item on your budget.”

Develop an Investment Policy Statement

Anyone who makes investments should create what’s called an investment policy statement (IPS) and follow it, says Johnson at Creighton University. “An IPS is a written document that clearly sets out an investor’s return objectives and risk tolerance over that investor’s relevant time horizon, along with applicable constraints such as liquidity needs and tax circumstances,” explains Johnson. “The whole point of an IPS is to guide you through changing market conditions. It should not be changed as a result of market fluctuations.”

Avoid Credit-Card Debt

Credit-card debt is a slippery slope in the best of times. And when the economy is uncertain, it’s best to avoid using credit cards as much as possible. “It’s never advised to spend money you don’t have via revolving lines of credit. And psychologically making purchases via most credit cards makes us a lot less frugal and undisciplined,” says Adem Selita, CEO and co-founder of The Debt Relief Company. “Considering that interest rates are near all-time lows, paying 20% or more on credit-card debt is a terrible financial decision to make.”

Clear Outstanding Debts

One more note about credit-card debt, if you’re able: Wipe out all existing debt. That will be the biggest favor you can do yourself in terms of meeting financial goals in 2021 and laying the groundwork for success (and beyond), says David Meltzer of East Insurance Group. “Chip off your debt bit by bit by paying off a small portion each month,” says Meltzer. “And do some belt-tightening on your spending for the time being. Take a look at your expenses and see which ones you can let go, and which ones you need to minimize, in order to help clear debt.”

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Streamline Your Budget

Study your cash flow, both your income and expenses and outline a realistic household budget, says Meltzer at East Insurance Group. “Your expenses should be exclusively necessities like house bills, groceries, food, mortgage, insurance, and savings,” says Meltzer. “There’s no room for gym memberships and Netflix subscriptions on a tight budget. Most importantly, keep track of your spending. At this point, each cent counts.”

Consider Living Below Your Means

While you’re busy outlining your month-to-month budget goals for 2021 and paring back your spending, you might consider establishing a plan to live well below your means.

“By spending less than you earn, you open up funds to put into a savings account for emergency situations, such as a pandemic, or the loss of a job,” says Mason Miranda, credit industry specialist for Credit Card Insider. “The more you save now, the more financially stable you’ll be later when a crisis hits. Depending on your goals and how much you can save, you could even avoid going into debt and pay for large purchases in cash.”

Prioritize Your Goals and Be Realistic

Prioritizing all of your financial goals allows you to put them into specific categories based on which goals you want to meet first, says George Birrell, CPA and founder of TaxHub. You’ll also want to set a realistic time frame for meeting those goals amid the uncertain economic landscape.

“Setting a realistic timeframe is very important,” says Birrell. “If you set a timeline for one year, but your expenses don’t allow for meeting that timeline or you don’t have the capacity to put in extra work to earn more, you’re not going to reach that goal. Look at it objectively and realistically.”

Set Milestones Toward Larger Goals

Think of a milestone as a smaller goal that helps you get to your larger goal, says entrepreneur Thierry Tremblay, CEO founder of the online database software company Kohezion.

“They are like guideposts on the trail — smaller tasks that you can do to help you stay in line with your overall goal,” says Tremblay. If you fail at various points along the way when pursuing financial goals, think of it as an opportunity to gain valuable insights about things that work and don’t work, says Tremblay. “When you move on to the next goal you’re trying to accomplish, you have an advantage because of the things you’ve learned from your failure,” adds Tremblay.

Start With What You Have

Financial advisers often recommended setting aside three to six months’ worth of income in an emergency fund, which can seem overwhelming if you’re living paycheck to paycheck as many are right now, says Emma Healey, family finance and budgeting expert and founder at Mum’s Money. Rather than giving up on establishing an emergency savings altogether in 2021, simply start smaller.

“Start with what you have. Even if you can only spare $5 a week, stashing it aside to help pad out your budget when times are tough,” says Healey. “It is a decision you’ll never regret. Add more as you can, but the most important thing is to start.”

Automate Your Savings, Debt, and Bill Payments

It’s hard to spend money if you’ve already sent it somewhere else, says Chelsie Moore, CFA and director, wealth management and financial planning for Country Financial. Create automatic debt payments, bill payments and automatic transfers from your checking account to your savings account.

“A little bit adds up over time,” says Moore. “Automatic payments may help you avoid late payment penalties, which are a waste of money, and automatic savings can add up without effort or feelings of sacrifice.”

Meeting your financial goals in the best of times can often be challenging. But when the world is topsy-turvy it can be even more perplexing trying to figure out how to accomplish your goals once you’ve defined them. A personal finance professional can help you navigate the uncertainty and plot a path to success.

“Seek the advice and guidance of a financial professional who has the expertise to assist you,” says Tracey Bissett, CFA and president of Bissett Financial Fitness. “The best way to find one is to seek recommendations from someone you trust and then interview potential advisors to find the best fit. You should feel comfortable talking to the professional and asking them questions.”

Be Kind to Yourself

It’s important to remember as you embark upon 2021, and any year for that matter, that financial fitness is a lifelong journey. “Take small, imperfect actions daily to increase your financial knowledge and movement towards your goals. If you make a misstep, be kind to yourself and get back on track,” says Bissett.

By: Mia Taylor

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Your Financial Year-End Checklist

2020 is over, and for many of you, it can’t end soon enough. There will be plenty of time to celebrate the end of one year and to hope for better days in the one ahead. But before we get to that, take these steps to get financially ready for 2021.

1) Review your goals: The end of the year is a great time to review the goals you made at the beginning of the year and set new ones for 2021. How did you do this year? Is there anything you’re proud of accomplishing? I like to start with bright spots because they can guide you toward success as you set new goals. But let’s be realistic, too; 2020 threw us a lot of curveballs.

Was there anything you wish you could have done better? You can also learn from any potential stumbling blocks and figure out how to use them as stepping-stones next year. You may also want to take time now to review your net worth. That’s one way to gauge the progress you’ve made in your financial health this year.

2) Update your budget: Did you save the money that you wanted to? Pay off the debt that you needed to? The end of the year gives you a solid end point to assess whether met the goals you set at the outset of 2020. What if you didn’t have a budget or financial goals? You’ve got a blank slate ahead. Why not create a budget that works? 

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3) Create a holiday bucket: Holidays can be budget breakers, so why not incorporate them into your spending goals right from the start? Christmas may look a lot different this year. But you can still create a separate bucket for holiday spending and when that money is gone, stop spending. You’ll thank yourself in January when you don’t have an unusually large credit card bill.

4) Use it or lose it: Some of your benefits—like vacation days or a medical or dependent care flexible spending account (FSA)—expire at the end of the year. Take stock of what you have left and use these benefits to your advantage. MORE FOR YOUPPP Loan Forgiveness Application Guidance For The Self-Employed, Freelancers And ContractorsSBA Approving Economic Injury Disaster Loans (EIDLs): What You Need To KnowWhat You Can Do Now To Maximize Paycheck Protection Loan Forgiveness

5) Make any last charitable contributions: December 31st is the last day your charitable contributions can be deducted on your 2020 tax return. If giving to charity is a part of your spending plan, you can use these questions to help make the most of your charitable giving.

6) Pump up your 529: Just like charitable contributions, contributions to your 529 college savings plan must be made by December 31st to count for this tax year. Find out if your state is one of over 30 that allow you to deduct your contribution. You can find the specific deduction here. If your state is one of the four that allow an unlimited deduction, keep in mind the yearly gift-tax and super-funding rules.

7) Max out your 401k: While you have until April to make contributions to your traditional IRA, Roth IRA and HSA, you can only contribute to your 401k through December 31st. So, if you have extra cash and are looking to boost your savings, consider contributing your last couple of checks entirely to your 401k. Business owners can do the same with the employee portion of your Solo 401k contributions.

8) Find your tax return: You’ll be doing your taxes before you know it, so use this time to get prepared. Review last year’s return and make a mental list of records you’ll need to assemble. Year-end is also a good time to decide whether a Roth conversion makes sense for you.

9) Review your business structure: Evaluate your business structure and the QBI deduction to identify any changes you need to make to your business. You might want to set up a solo 401k, for instance, and if so, you’ll have to act before December 31st (although you can make employer/profit sharing contributions up to the business tax filing deadline).

10) Defer income and incur expenses: If you’re a business owner, you may also want to look at ways to defer income into 2021 or pay for business expenses you anticipate for early next year. This is any easy way to reduce your tax liability for 2020. However, remember not to spend money on business expenses that you wouldn’t otherwise incur just for a tax deduction. Spending a $1 to save 24 cents still costs you 76 cents.

 11) Will and trust review: The end of the year is a good time to take stock of changes in your life—like getting married or divorced, having children, starting a business or retiring.  Your estate plan should reflect these changes. Get out your will, documentation for trusts you’ve established and powers of attorney and make sure they match your current situation.

12) Insurance documents: Insurance documents also need to cover your current situation. Take a look at your life and disability insurance policies to make sure they protect your current income and those dependent on it. Your renters or homeowners insurance should cover any additional big purchases you made during the year. And lastly, you should review your health insurance policy for any upcoming changes for 2020. For those of you enrolling in the Market Place, you have until December 15th to pick your plan.

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My last bonus task is to enjoy this holiday season. I love the holidays because you can reflect and appreciate what you have. We’ve been tested a lot this year, living our lives through a pandemic, racial unrest and a contentious election. I hope the end of the year brings you comfort and peace. Follow me on Twitter or LinkedIn. Check out my website

Brian Thompson

Brian Thompson

As both a tax attorney and a CERTIFIED FINANCIAL PLANNER™, I provide comprehensive financial planning to LGBTQ entrepreneurs who run mission-driven businesses. I hold a special place in my heart for small-business owners. I spent a decade defending them against the IRS as a tax attorney and have become one as a financial advisor. It’s a position filled with hope and opportunity. It gives you the most flexibility to create the life that you want. I also understand the added stresses of running a business while being a person of color and a part of the LGBTQ community. You may feel like you don’t have access to the knowledge that others do. I’m here to help lift some of that weight from your shoulders.

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Critics:

A personal budget or home budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget. For example, jobs are an income source, while bills and rent payments are expenses.

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Wall Street Strategists Are Already Telling Clients What To Expect In 2021

And Wall Street strategists are starting to move on to 2021. In a note to clients published Thursday, Sean Darby, global equity strategist at Jefferies, unveiled his S&P 500 price target for 2021. And Darby expects stocks will continue going up next year.

“We expect the market to reach 3,750 by end of 2021,” Darby wrote, unveiling his year-ahead price target for the first time. On Thursday, the S&P 500 closed at 3,510, implying just under a 7% gain for the benchmark index through the end of next year.

Underpinning Darby’s positive outlook is an improved outlook for corporate earnings amid a strengthening economy and an accommodative Federal Reserve.

“All of our US macro-equity-bond indicators are positive or beginning to turn,” Darby writes.

S&P 500 earnings are finally beginning to reflect the better underlying health of the economy as the backlog of orders increases. Similarly, the Russell 3000 earnings are just turning at the same time as job openings are recovering.”

Darby adds that, “One key underwriter for the markets, under either candidate, has been the Fed with its intervention in both fixed income and credit markets. The influence of the Fed’s balance sheet should not be underestimated as the forward PE ratio has certainly tracked the ‘excess money’ in the economy.”

So while some may argue that the Fed is “out of ammo” after the unprecedented expansion of its credit facilities in the early part of this pandemic, the Fed is still a driving force behind flows in the market. On Thursday, Fed Chair Jerome Powell reiterated the central bank’s stance, saying at a press conference, “We are committed to using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible.”

And as Canaccord Genuity’s Tony Dwyer wrote in a note to clients this week, “Remember, a significant and sustainable period of economic retrenchment comes when there is a need for money to fund forward growth but very little access to it. The opposite is true today.”

Darby also expects the political situation to serve as a tailwind to investors. At least as far as market history is concerned.

As of Friday morning, the race for president had yet to be called. However, former Vice President Joe Biden’s odds of winning improved as he took the lead in the battleground state of Georgia over President Trump. Meanwhile, the prospect of a “blue wave” in Congress has been all but ruled out by investors.

In scenarios where a Democrat is in the White House but Republicans control at least one chamber of Congress, average returns for U.S. equities have been fantastic, with the S&P 500 rising an average of 33.9% during these periods since 1989.

Divided government under Democratic presidents has been great for the stock market over the last three decades. (Source: Jefferies)

As Darby writes, “Although we think the equity markets ‘churn’ until a result is determined, history suggests that periods of Democrat Gridlocked Congress tend to deliver positive returns.”

By Myles Udland, reporter and anchor for Yahoo Finance Live. Follow him at @MylesUdland

What to watch today

Economy

  • 8:30 a.m. ET: Change in Non-farm Payrolls, October (593,000 expected, 661,000 in September)
  • 8:30 a.m. ET: Unemployment Rate, October (7.7% expected, 7.9% in September)
  • 8:30 a.m. ET: Average Hourly Earnings month-over-month, October (0.2% expected, 0.1% in September)
  • 8:30 a.m. ET: Average Hourly Earnings year-over-year, September (4.6% expected, 4.7% in September)
  • 8:30 a.m. ET: Labor Force Participation Rate, October (61.5% expected, 61.4% in September)
  • 10:00 a.m. ET: Wholesale Inventories month-over-month, September final (-0.1% in prior print)

Earnings

Pre-market

  • Before market open: Viacom (VIAC) is expected to report adjusted earnings of 81 cents per share on revenue of $5.96 billion
  • 6:00 a.m. ET: Coty (COTY) is expected to report an adjusted loss of 20 cents per share on revenue of $1.14 billion
  • 6:30 a.m. ET: CVS Health Corp (CVS) is expected to report adjusted earnings of $1.33 per share on revenue of $66.66 billion
  • 7:00 a.m. ET: Marriott International (MAR) is expected to report an adjusted loss of 8 cents per share on revenue of $2.23 billion

Top News

US election fuels strong week of gains on global stock markets [Yahoo Finance UK]

Uber beats Q3 earnings expectations powered by growth in Eats business, Rides falls short [Yahoo Finance]

Petco retail chain says it’s filed confidentially for U.S. IPO [Bloomberg]

Tesla unveils ‘Tesla Tequila’ for $250, product sold-out on website [Reuters]

YAHOO FINANCE HIGHLIGHTS

How Trump’s legal woes will worsen once he leaves office

Connecticut would consider legalizing marijuana, says governor

These states suffer the worst unemployment as the pandemic recovery continues

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Peter Boockvar, chief investment officer at Bleakley Advisory Group, joins “Squawk Box” to discuss what trends he expects to see in the market as he looks ahead to 2021. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide. The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30: https://www.cnbc.com/2020/09/29/the-n… Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBChttps://www.cnbc.com/select/best-cred…#CNBC#CNBCTV

Women and Money: Why It’s Important to Take Control of Your Finances – Carrie Schwab Pomerantz

I’d like to use this March focus on women to encourage women everywhere to take charge of their finances as an important step in negotiating a better situation for themselves. To me, financial independence is empowering. By taking charge of your finances, you’re taking charge of your life. Here are some ideas on how to do just that.

1) financial independence

Women are known to put others’ needs first, but when it comes to retirement, you have to think of yourself. Take charge of your own financial future by taking full advantage of a company retirement plan.

Contribute at least up to the company match, more if possible. Don’t have a company plan? Open an IRA. The point is to save as much as you can as soon as you can.

Start in your twenties and you can comfortably save about 10-15 percent of your annual salary (including any contributions from your employer) and you may not have to increase that percentage for the rest of your working years. Start later and that percentage goes up precipitously.

For instance, if you wait until age 40, you’d have to sock away a minimum of 25 percent of your annual salary. That may sound like a lot, butrealize that retirement can be long. Many financial planners recommend that you anticipate living until 90-plus in retirement planning calculations. You need to be prepared.

2) Don’t just save—invest

Part of that preparation is learning to make the most of your money, and that means investing. Your first thought may be that you don’t want to take the risk, and market ups and downs are definitely a reality. But being too cautious can also put you at a disadvantage.

Especially for something with a longer time horizon such as retirement, you ideally want a diversified portfolio that’s positioned for growth. This means having a portion of your money invested in the stock market and accepting the associated risk. While that can sound daunting, it doesn’t have to be because you don’t have to go it completely alone.

3) Team up with an advisor

When it comes to investing and managing your money, having a support team can be a great confidence booster. Even if you’re just starting out—and especially as your assets grow—consider working with an advisor. I think of a financial advisor sort of like a personal trainer, someone to guide you and keep you going when you might otherwise be tempted to call it quits.

An advisor can help you look at the big picture, focus on retirement planning and build a well-diversified portfolio. And working with an advisor who understands you and your goals can be a major source of peace of mind. So think about the type of person you’d be most comfortable with. A lot of women prefer to work with a female advisor.

But gender aside, look for someone with whom you can communicate easily. Of course, how much you want to work with an advisor is up to you—a one-time consultation, periodic check-ins, or full-time asset management. Just make sure you understand how and how much your advisor is paid. Costs matter.

4) Have a financial plan

To really get on top of your finances, you may want to work with a Certified Financial Planner (CFP) professional to develop a comprehensive financial plan. A 2012 Schwab study on women’s confidence in managing their finances indicated that women with a written financial plan were significantly more confident than women without one.

I’m a huge advocate of having a financial plan because it goes beyond just saving and investing, and helps you look holistically at all the interrelated parts of your financial life. It reviews your income, expenses, investments, retirement planning, insurance coverage, income tax liability, estate planning needs and—most importantly—how they all work together. Plus it gives you a roadmap to follow and a plan of action.

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