January’s Gone: Here’s How You Can Still Make Financial Resolutions You’ll Keep All Year

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It’s already the end of January 2021, and though you likely had the best intentions, it’s quite possible you haven’t made any headway on your financial resolutions — or perhaps you haven’t even decided what they are yet. The good news is there’s still time to make attainable goals and follow them. GOBankingRates talked to experts in financial planning to help you make a plan for success in 2021.

Find Out: How To Accomplish Your Resolutions on a Budget

1. Make SMART Goals

The caps lock wasn’t just for dramatic effect. SMART stands for specific, measurable, achievable, realistic and timely goals. Matthew T. Gray, a financial advisor at Personal Capital, swears by this method for his clients. Here’s how it breaks down: 

  • Specific: Attach an exact dollar amount to each of your goals. 
  • Measurable: Make sure your success is trackable. For example: I want to pay off my credit card debt by the end of the year. 
  • Achievable: Ask yourself if you can feasibly commit to this goal given your income.
  • Realistic: Note any life changes that might affect your goals. Are you planning to buy a house or expecting a child? These circumstances might affect your monetary reality.
  • Timely: Set a date when your goals should be achieved.

Building Wealth

Find Out: How To Rebound From a Bad Financial Year: 2020 Edition

Gray noted that though “achievable” and “realistic” might seem similar, they’re slightly different. “Achievability refers to your ability to complete a task, while realistic is how a goal will fit into your larger plans,” he said. 

Start Now: How To Create a Budget You Can Live With

2. Automate Savings

Saving more is a resolution on almost everyone’s list. It seems simple in theory, but if you just plan on saving what’s left over at the end of the month, many times there’s not much — if anything — left to set aside. Instead, Gray recommends setting up automatic recurring contributions to your savings account so you never have to give it a second thought.

“Your future is your most important bill to pay, so make sure you pay that first, and then spend whatever you have left,” Gray said.

Read: 16 Effective Ways To Trick Yourself Into Saving Money

3. Pay Off Bad Debt

If one of your goals this year is to pay off your debt, it’s most important to pay off credit cards with high interest rates, personal loans and payday loans first. According to Gray, these bills tend to do more damage to your credit score than debt like student loans or mortgages. 

Here are two commonly used ways to pay off debt that Gray recommended. 

  • Avalanche method: Pay off the card or loan with the highest interest rate first, then move to the next in descending order. You pay less in interest, but it can take a while to see major results if that card has a lot of debt on it.
  • Snowball method: Pay off the card or loan with the lowest amount of debt first, then move to the next in ascending order. You make progress quickly on small debts, which could serve as motivation to keep paying off larger debts.

“I think of paying off debt as financial cardio: It helps your finances become leaner and more energized. Once you don’t have the drag of interest payments on your cash flow, you can use that cash in other ways,” Gray said.

Building Wealth

Have It All: 50 Ways To Live the Big Life on a Small Budget

4. Review Your Insurance Coverage

You usually review your health insurance elections once a year for open enrollment, but plans like car insurance and home insurance should be reviewed to make sure they still fit your current lifestyle. Andrew Crowell, vice chairman of wealth management at D.A. Davidson, said this review should be done yearly. “A comprehensive insurance inventory with a specialist could not just save in premiums, but also potentially improve or expand coverage through consolidation.”

If you create manageable financial goals and stick to them, your 2021 may be an even bigger success than you’d hoped!

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Last updated: Feb. 1, 2021

About the Author

Sam DiSalvo is an LA-based comedian, writer and actor who's performed all over the country. Her written work has appeared in numerous digital publications. As a copywriter, she's worked with a variety of major brands including GoldieBlox and Thrive Causemetics. Sam loves dogs and is currently perusing leisure suits to buy for her corgi mix, Barry

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