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21 Financial Goals for 2021

Written by: Corey Janoff 

I’m really good at contradicting myself and making sense (in my head) while doing it. For example, I am a big advocate of setting goals and creating a plan to achieve those goals.  The simple process of creating a goal and an action plan to achieve it can help you accomplish a lot.  I’m not a big fan of New Year’s resolutions because they are usually a half-hearted self-improvement “goal” that we bail on by February.  For example, every year, I tell myself I will swear less, say more positive things, and less negative things.  I don’t make much progress.   

I’m a fan of goal setting while also being opposed to goals.  Don’t worry. The rest of this post will make more sense.  

Maybe my problem is I don’t have a concrete, quantifiable goal for my New Year’s resolution, nor do I have a plan to accomplish it.  Maybe I should carry around a notebook and mark a tally each time a swear word comes out of my mouth.  From there, I could work to reduce that number every day/week/etc.   

I find financial goals are easier to wrap my head around because they are more quantifiable.  I can create a numerical action plan to achieve it. Sticking with the plan is the challenge – something is bound to alter your course along the way, or at the very least, tempt you to veer off the right path.   

One nice thing about financial goals is most of them can be automated. 401k contributions are automatically withheld from your paycheck. Your mortgage payment is auto-debited from your checking account.  You set up a systematic investment purchase plan in pretty much any type of investment account. The less you have to think about it, the easier it is to complete if I could only automate a filter on my thoughts to weed out the negative ones.  

In the spirit of the new year, I put together a list of 21 financial goals for you to consider for 2021.  I don’t expect you to implement all of these. Some of these you are already practicing, so keep up the excellent work.   

My challenge to you is to implement at least one of these. While you are reading, if one of the ideas jumps out at you as something you can do, stop reading right then and go ahead and implement it. You can come back and finish reading where you left off.  At the very least, set a reminder for yourself to implement it.   

There is a rule we have at Finity called the 72-hour rule – if you don’t do something you say you are going to do within 72 hours, it probably isn’t going to get done.  There are exceptions, of course, but generally speaking, it holds true. For example, if your car is a mess and you tell yourself you will clean it out and vacuum it if it doesn’t happen within 72 hours, it’s probably not high on your priority list. I’ve been telling myself I am going to vacuum my car for about eight months now.  I digress.   

Below are 21 financial goals for you to implement this year.  Get lost in 2020, and it is time for a new year. Let’s go! 

1. Max Out Your 401k (or Increase by $100/paycheck) 

You can contribute $19,500 to your 401k/403b account in 2021 (plus an additional $6,500 if age 50+). That amounts to $1,625/month. If you are self-employed or own your own business, you can contribute $58,000. If you aren’t already maxing your account out each year, do so. If that is too much of a stretch for you, bump your contributions by $100/month, or 1-2% of your paycheck, or more. Do that every year, and every time you get a pay raise, your future self will thank you!   

If you have a spouse who can contribute to a retirement account, have them max out their account next. 

Talk about your financial goals with an Advisor! 


2. Max Out Your Roth IRA (or Increase Deposits by $100/month) 

Each person can contribute up to $6,000 ($7,000 age 50+) to a Roth IRA in 2021. That limit is the same for the Backdoor Roth IRA, for those who earn over the income limit for Roth IRA eligibility.  

Make sure you are maxing these accounts out if eligible. This is a great place to start your savings plan while you are still in residency.   

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3. Increase Contributions to Your Kids 529 Plan by $100/month 

Every January, I increase the automatic monthly deposits to both of my kids’ 529 college savings accounts by $100/month.  Once I have enough in there to cover the desired amount of higher education I want to pay for, I’ll stop adding more.   

It’s all automated, so I only have to think about it once per year, and I have a calendar reminder set to make sure it gets done.   

If you need help figuring out how much to save to cover college expenses for your kids, schedule a meeting with one of our financial advisors today

4. Increase Your Mortgage Payment by $100/month 

If you have a $500,000 mortgage at 3.25%, your mortgage payment on a 30-year fixed loan will be $2,176.03/month. That doesn’t include taxes, insurance, or anything else – only principal and interest. If you pay that over 30 years, you will pay a total of $783,371. 

If you increase your monthly payment by $100 and pay $2,276.03/month instead, you will pay the mortgage off in just under 28 years, and the total cost will be $760,556. Debt-free two years faster and save $23k in the process? Sign me up.   

Increase your payment by $100 every year, and you’ll have your home paid off pretty quickly.  

New years resolution

5. Increase Your Car Loan Payment by $100/month 

Same logic here as paying extra to the mortgage, except your car loan, should be paid off significantly faster than your mortgage. 

6. Increase Other Automatic Debit Payments by $100/month 

The fastest way to become debt free is to pay the minimum amount due on every debt you have, except the debt with the highest interest rate. That’s the one you pay extra money towards.  Yes, I’m aware some talking heads recommend paying off your debt with the smallest balance first and then work your way up. There can be some psychological advantages to that method.  Mathematically, going after the highest interest rate is the most efficient. If you have other debts, increase your automatic payments on the highest interest rate one to pay it off faster.  

7. Increase Contributions to a Brokerage Account by $100/month 

Pay off debt versus save more for your future. Either way, it’s financially productive, in my opinion. You’re making progress in the right direction. If your debts are under control and you are maxing out your qualified retirement accounts, an easy next step is to deposit money into a taxable brokerage account.  There are no limits on how much you can contribute here, so do as much as you can! 

8. Set-Up/Increase a Recurring Monthly Contribution to Charity 

Many charities allow you to make automatic recurring monthly contributions for those of you who are charitably inclined. This can also be an excellent way to reduce your tax burden if you itemize your tax deductions.  

9. Increase Your Disability Insurance 

If your income has increased since you originally purchased your disability insurance, my guess is your lifestyle has also increased. Unless you are financially independent, it is probably smart to protect your income. Suppose you have a future increase option/future purchase option/benefit update rider on your policy. In that case, you can increase your coverage without medical underwriting on your policy anniversary (either annually or every three years, depending on the company).   

financial goals

10. Extend/Increase Your Term Life Insurance 

One thing for certain is life changes over time. Some of you may have purchased a 20-year term life policy ten years ago when you had two kids. Now you have four kids, and some will definitely still be in the house when your term policy expires.   

If you are in decent health, it is pretty easy nowadays to get a decent amount of life insurance. Some companies will let you get up to $2 million of coverage without a health exam (if your application and health history look good).  This is one of the silver linings the pandemic has brought us since people are hesitant to do in-person health exams while social distancing is still essential.   

11. Get a Home Inspection and Sewer Scope 

Kind of random, but if you have been in your home awhile, it might be worth having an inspection and sewer scope for peace of mind.  A sewer scope is basically a colonoscopy for your sewer pipes.  My neighbor had their sewer pipe back up, and it flooded the downstairs of their house.  A lot of toilet water going in the wrong direction.  Not fun.  An inspection can help you identify any potential problem areas of your house that should be addressed sooner rather than later.  

12. Increase Your Umbrella Liability Insurance 

If you don’t have umbrella liability insurance, get it. You can purchase it through your home & auto insurance company, and it provides additional liability protection on top of your home and auto insurance.  It is typically sold in $1 million increments. It should only cost $200-300/year.  For the cost, it might be the least expensive form of asset protection you can buy. 

For example, if you get in a car accident and are at fault and the person you hit sues you for $1 million and wins the lawsuit, your first line of defense is your car insurance.  That has a limit of probably a few hundred thousand. The rest of that liability is coming out of your pocket unless you have an umbrella policy.   

If you only have a $1M policy, depending on your assets and income, it might be worth increasing that.  

2021 goals

13. Set Up an Automatic Savings Plan for a Future Vacation 

After being housebound for the better part of the past year, we’re all ready to get out and have fun once it’s socially acceptable. Start saving now for that vacation you want to take when the pandemic is a thing of the past.  Set up a direct deposit from your paycheck or an automatic transfer to your savings account.   

14. Open a High-Interest Savings Account 

“High interest” is a little misleading, as you’re looking at about 0.5-0.7% right now (end of 2020).  However, that’s about 0.5-0.7% more than most traditional banks will credit you on your savings. Every little bit adds up. Plus, those interest rates will fluctuate with the overall market interest rates. A year ago, most high-interest accounts were crediting around 2%.  

15. Rebalance Your Investments and Set an Auto-Rebalance on Your 401k 

Rebalancing is the act of adjusting your portfolio back to the desired target allocations you originally set out to maintain (e.g., 30% large-cap domestic stock, 20% small-cap stock, 30% international stock, 10% bonds, etc.).  As time goes on, different sectors perform differently from one another, so your portfolio is bound to deviate from your targets over time. It’s a good habit to rebalance back to your targets at least annually to keep things on track.  Most workplace retirement accounts also have an auto-rebalance feature you can turn on to automatically do this for you. 

16. Tax-Loss Harvest Your Taxable Accounts 

I won’t get into the ins and outs of tax-loss harvesting here, but this should be a regular habit anytime you have losses in your taxable accounts. In short, sell positions that are down in value, as those paper losses can be used to offset gains, therefore reducing your tax liability.  

Anytime the market is down considerably presents an excellent opportunity for tax-loss harvesting. If you own individual stocks, those can be quite volatile and often are out of sync with the overall market, so keep an eye on those regularly.  

17. Review/Update Beneficiaries on Life Insurance & Retirement Accounts 

Make sure the beneficiaries on your accounts are who you want them to be.  If you die, you want your money to go to the right people or entities.  One of the essential components of estate planning is having beneficiaries properly named on your accounts/policies.   

18. Refinance Your Mortgage and DIRECT THE SAVINGS SOMEWHERE PRODUCTIVE! 

Mortgage rates are at all-time lows. If you plan on staying in your house for at least a few more years, refinancing your mortgage could make sense if you didn’t already do so in 2020.  The key is to be productive with the savings!   

If you are five years into a 30-year mortgage and you refinance to a new 30-year mortgage at 1% less interest, and your payment goes down by $400/month, that is great! However, you just added five extra years to your home loan, making your payoff timeline 35 years instead of the original 30. Take those $ 400 monthly savings, either invest it, pay extra to another debt, or keep paying the same amount to your mortgage and pay it off faster.   

19. Read All My Blog Posts on Home Buying Before Buying a House 

What you live in and what you drive will arguably have the biggest impact on your ability to achieve your financial goals. Be smart about those decisions. 

You can also listen to our podcast episode about how much house can a doctor afford.  Financial Clarity for Doctors. Available on all the popular podcast apps. 

20. Review PSLF Program Requirements for Student Loan Forgiveness 

For those of you with student loans pursuing Public Service Loan Forgiveness, aka the PSLF Program, make sure you are doing everything you need to in order to qualify for loan forgiveness. The federal student aid website has a lot of useful information, and they have done a great job making it easier to navigate in the last year or so. 

The five main requirements are: 

  1. Work for a qualifying employer (non-profit) 
  2. Have qualifying loans (federal Direct student loans) 
  3. FedLoan Servicing is your loan servicer 
  4. Be on a qualifying payment plan (one of the income-driven payment plans) 
  5. Make 120 monthly payments (10 years) 

21. Get Someone to Hold You Accountable 

We do a lot better at achieving goals when we have a partner to do things with. Think of exercising.  When left to our own devices, we often slack off and skip workout days. If you have a fixed workout schedule with a buddy, you don’t want to let your friend down.  In the spirit of competition, you can also push each other to do more.  I often set personal records when I do Peloton rides with my brother or a friend because I want to win. When I ride by myself, I rarely hit a new high.  

Conclusion 

Notice none of these action items include eliminating latte’s or cutting your own hair instead of paying someone else to cut it for you.  Is Starbucks really hurting your finances?  I submit that it is not. Focus on your goals and automating action items to achieve those goals. The less you have to think about your finances, knowing they are being taken care of, the easier it is to enjoy your life. 

Here’s to making 2021 a better year than 2020.  The bar was set low, so we better clear it! 

Disclosures: 

This is information only and should not be construed as individualized recommendations or advice. Investing involves the risk of loss, including total loss of principal. Consult with your financial advisor before making any investment decisions. Consult with your tax professional for tax implications pertaining to your particular circumstances.  

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