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2020 has been nothing short of an unpredictable year, where anything that’s considered normal is from the “good old days”. The COVID-19 pandemic resulted in an economic slowdown, job losses, and financial stress for many families and individuals. Unemployment numbers for November were down to 6.7 percent, which tells us that the recovery will be a slow and unknown journey.


Regardless if the pandemic had a negative impact on your financial health, it’s clear that your finances should be prioritized. Improving your finances in 2021 will help prepare you for any financial challenges that may arise. Seeking advice from financial professionals is a great idea, especially if you have questions about your specific situation.



Here are a few key factors you should consider to help improve your finances for this year:


Setting Financial Goals

Before diving into specifics, think about what goals you want to accomplish from a financial standpoint. Goal-setting is one of the proven ways to help individuals make positive changes in their lives. It can be applied to help achieve any goal including weight-loss, passing a test, getting hired by the company of your dreams, and more. So, applying goal-setting to your finances just makes sense.



Think about what you want to accomplish this year with your finances. Do you want to change your money mindset? Start saving money to put towards retirement? Whatever your financial goals are for 2021 make sure they are specific and lofty.


For example, let’s say you want to build an emergency fund. You decide to set the goal at the end of the year to have saved $5,000 towards this fund. This is going to require you to save a little over $400 a month, which can be doable as long as you have a clear and specific plan.


This makes the goal realistic and attainable, but you’re going to have to make some effort to reach it. Lofty goals increase your motivation, and your brain will naturally think of ways to accomplish them.


Set Milestones along the Way

Having a lofty goal to accomplish is great but may feel almost impossible to achieve. That is why setting up milestones will help keep you motivated by celebrating the progress you are making. Think of milestones as smaller goals that get you closer to your big goal.


If you set debt payoff goals, milestones could be things like:

  • Creating a budget and determining how much money can be used towards paying off debt
  • Recognizing progress you’re making at regular intervals such as every time you’ve paid off 25 percent of your debt or when a credit card is paid off


Think about what things need to be done to ultimately reach your financial goal. Milestones are basically like reverse engineering that should make achieving your goal easier.


Create a Budget that Actually Works

This may sound like a broken record, but creating a budget is one of the best things you can do to improve your finances. Budgeting is meant to be used as a blueprint to get to your financial goals. It helps identify areas where you are spending too much and can help find extra money which can be used towards your financial goals.


Give yourself a month to keep track of your normal spending habits. Put them into categories so it’s more straightforward. Examples of categories include groceries, clothing, eating out, subscription services, and entertainment.


Now jot down your monthly income. If your income varies each month because of the nature of the job, side hustles, etc. then take an average of the last few months. The last set of numbers you will need is all your necessary monthly expenses, which include things like rent/mortgage, car payments, student loan payments, utilities, etc.


Now, look at some ways you could cut down on your spending habits. Do you really need a subscription to Disney Plus, Hulu, Netflix, and Apple TV? Is there a gym membership that you haven’t used in over six months that could be canceled? Groceries and dining out are two common areas that people tend to overspend. Packing your lunches and meal planning your food each week could help cut down on these expenses.


The money that you’ve “found” and have leftover can then be used towards achieving your financial goal. Make sure when you’re cutting down on expenses, you’re being realistic. If you are trying to go from spending $400 a month on eating out to $100, that’s going to be hard to stick with. And do not get frustrated if you end up overspending a few months. A budget should be flexible enough to weather these storms.


If you want to use a specific budgeting method, there are plenty of them out there. Here are a few that others have found success with:

  • Zero-Sum Budgeting – Every dollar earned is assigned a specific purpose; You start with all your non-negotiable bills like mortgage, insurance, etc. Then the money leftover can be used for spending or saving (including debt repayment)
  • Paying yourself first – 25 percent of your take-home income goes towards whatever goals you have. I.e. 15 percent towards retirement, 10 percent towards a down payment. The rest can be spent however you wish.
  • Envelope method – This budget takes all of your available cash and sets them into certain budget categories. First, your money goes towards necessities like rent, utilities, etc. Then money is allocated towards discretionary spending like “entertainment”.


Having trouble with budgeting or deciding if you should use a certain budgeting method? Financial professionals are experts in helping people manage their money better. Don’t be afraid to reach out to one and get some guidance.

Find ways to Increase your Income

More money can give you a better financial outlook when it is used to reach financial goals faster. There are a couple of ways to do this including getting promoted, a raise, finding a new job, or starting a side hustle.

Getting Promoted

Talk to your boss about what skills or abilities you may need to move to the step. See if you can work on specific projects that will get you the right experience. It might be necessary to get specific education or training that your employer might even pay for. You might even ask your boss to help with creating a development plan to help you get promoted.

Receive a Raise

Make sure you’re a valuable top performer at your job. Remember, it’s not about what your employer can do for you, it’s about what you’re doing for them. Keep track of everything you’re contributing so that you can reference it later. Use this track record when you’re ready to meet with your boss and have a discussion about receiving a raise. You might even be surprised to learn that they have already been working on increasing your salary based on your contributions.

Find a New Job

Unfortunately, if you like your job and co-workers, the best way to make more money is to get a new job. Hop on websites like LinkedIn or Indeed to find what positions are available. Update your resume and have a few trusted people review it. Before an interview, research the company, jot down questions to ask, and practice!

Start a Side Hustle

Any business or side hustle you start is going to be on top of your current job. So it requires some time management and might not be the long-term solution.  If you’re looking to go full-time someday or fulfill a passion, then this is a step that makes sense. Otherwise, you can work when you have time by taking advantage of the gig economy to take on jobs like ridesharing for Uber or meal delivery with DoorDash.


Improve your credit score in 2021

2020 has been a tough financial year for many people. Your credit score is critical to getting approved for home loans and getting a good interest rate. This year is a good time to improve your financial health by working on your credit. Here are some ways you can make that happen:

Make Timely Payments

Your payment history is the single most important factor in building and improving your credit score. A single missed payment can take a while to recover from. Virtually every credit card company allows you to sign up for auto-pay. Automate this to save yourself from a costly mistake.

Keep your Credit Usage low

Referred to as your credit utilization, this is the percentage of credit that you are using versus your credit limit. If you have a credit card that has a limit of $1000 that you’re using $200, then your usage is 20 percent. It is recommended that you keep your credit utilization under 30 percent; however, 10 percent is even better!


Carrying a balance on a credit card is expensive. You’re paying double-digit interest on what you don’t pay. Try to pay more than just the minimum balance to get it paid off faster. Minimize using credit cards for purchases that you are already have a balance.

Don’t Open Credit Accounts when you don’t need them

Sure it’s enticing to take advantage of that credit card offer and get all those travel points, but ask yourself if you really need it. If the card doesn’t offer anything aside from a one-time bonus, you’ll be better off not opening a new account.

Consider a Credit Rebuilder card

Having a poor credit history is a challenging situation. There are some financial tools that can help though. Get a credit rebuilder card that has a low and manageable limit. Make it a goal to pay it off in full each month to help improve your credit score.

Review your Credit Report

You’re entitled to a free copy of your credit report each year from each of the three credit bureau reporting agencies. Order a copy at least once every six months and go over it. Mistakes should be reported immediately to the agency that the report is from.


Don’t close your Credit Card Accounts

Closing credit cards as a strategy to help improve your credit score will actually backfire. Your credit history takes into heavy consideration how long you’ve had your oldest account and the average age of your accounts. Your first credit card from 15 years ago could be sitting in your desk drawer unused for years, but it is still important to your credit.