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2021 Financial Planning To-Do List

February 17, 2021

For many people, tackling your finances in a new year can seem daunting. But, with a few quick tips and tricks, we are here to help you create a plan to get your finances for 2021. While the new year’s motivation is still high, grab your calendar and add a few intentions each month to help you stay on the path to achieve your financial goals. To make this task a little less intimidating, start by focusing on the first six months of the year.

There is no better time than the new year to review your financial goals. 2020 was a year of change for everyone, and many of those changes may have affected your financial goals. Has working from home made it possible for you to move to a more affordable area? Maybe you were laid off during the pandemic and recently started a new job. The birth of any children or grandchildren over the last year may have sparked your interest in a college savings plan?

Start by creating a short-term financial plan for yourself. First, identify your financial goals. Maybe your goal is to retire early or buy a house next year. By identifying these goals, you can start building a pathway to achieving them.

If you don’t already have a budget, now is a great time to start one. By creating a budget, you retake control of your money by deciding how much you are willing to spend in certain areas of your life, rather than your money control you. Create a savings plan for that house you will buy next year, and be sure to create a “rainy day” fund for those unexpected emergencies.

Once you have your budget finalized, the next step is to ensure your 401k contributions are invested. Often with employer plans, much of your contribution is held in cash until manually invested. Be sure your money is working for you, and you are taking advantage of this tax-deferred plan by reducing any large cash holdings in these accounts.

If you have an IRA, considering making a 2020 contribution may help you get a better return on your taxes. The contribution cut-off for 2020 ends April 15. That advantage of these potential savings by consulting your financial professional or tax advisor to see if a 2020 contribution is beneficial for your needs.

File your taxes. The long-dreaded tax season is upon us, but filing your taxes doesn’t have to be as challenging as everyone makes it seem. Be on the lookout for any late arrival tax documents from your investment accounts.

In addition to filing your taxes, take this time to give your investments a second look. 2020 was a year of market changes. From record highs to record lows, a lot has changed in the last year, and your investments may need to change as well. More than likely, your accounts will need to be re-balanced.

How often do you review the expenses on your investment accounts? Check that you are not paying too much for mutual funds, exchange-traded funds, or investment management. For many mutual funds or ETFs, a quick google search or call to your financial professional is an easy way to determine your expense ratio. Review your portfolio and decide if you're happy with your investments and their expenses or if you should reconsider your allocations.

As we said early, building a plan and tackling your finances doesn’t have to be daunting. These little successes each month will compound to help you create the financial future you desire. So stick with it! If you’re interested in hearing more ways to take charge of your finances in 2021, reach out to our team today to get started.

We’d love to share our experience with you and help you reach your goals this year. Contact us today!