How to Set Yourself up for Financial Success in 2021

Leaving 2020 behind doesn’t mean we’re leaving all the drama behind, too. 2021 is still a pandemic year, bringing heaps of uncertainty with it. 

There are reasons to be optimistic about 2021, however. And reasons to be careful. So how do you strike a balance between cautious and hopeful in your New Year’s goals? 

The short answer is this: prepare for the worst, but hope for the best. 

Here’s how you can apply that philosophy to your resolutions:

Review your year

A year-end review is important every year, but this year especially, take some time to reflect. A lot happened. A lot changed. Everyone was impacted in some way. 

If you had a tough year, you might feel like skipping this step and moving on. But if you can look at the numbers without judging or beating yourself up, you can learn quite a bit. As you reflect, ask yourself these questions:

• What caused me the most stress?
• What went well?
• What goals did I achieve?
• What goals did I not achieve that I want to focus on in 2021?
• Knowing what I do now, what would I have done differently this year?
• Did I budget well this year, or at all? If not, how can I budget in the new year?

And remember, it’s okay if you had to course correct or the year didn’t look like you wanted it to. Give yourself grace for the challenging year you had, and pick back up when you can.

Create a plan for financial success

If you weren’t able to achieve any of your 2020 goals, it can be tempting to just take a “wait and see” approach for 2021.

But you should make plans for the year ahead, even if you’re not sure any of them will pan out. That’s because setting goals makes you much likelier to make positive progress and changes this year. They give you guideposts to help you move the needle, even just a little.

So set some goals like you would any other year. Just anticipate that you might need to tweak them as the year goes on.

What to focus on for financial success in 2021

As you set your goals for the year ahead, remember that 2021 will probably still be a little weird. And in years of uncertainty, you might need to focus more on safety nets.

Make your emergency fund a priority. If your income isn’t what it used to be, you can still create an emergency fund for you and your family. Aim to bank 3-6 months worth of your expenses, but don’t panic if you’re not there yet. Do what you can.