12 Financial Resolutions for the 2021 New Year

2020 was more than tough. But a new year brings new opportunities for self-reflection and growth. 

And your finances are always a great place to start.

No matter where you are in your financial journey, it’s important to take a look at where you stand and set goals for where you want to be. And while everyone will have different priorities, the fundamentals of financial health remain the same. 

Ready to kick off the new year? Here are 12 resolutions — one for each month — to whip your finances into shape.

January: Check in on financial health

The first step to tackling a new year is to take stock of your financial health. Start by reviewing your finances, including income, expenses, debt, and savings. 

To do this, focus on the past month. List all sources of income and total expenses. Next, list all debts owed and their monthly payments — this includes student loans, credit card debt, personal loans, a car loan, or a mortgage. Finally, list the amount, if any, intended for savings or investments. An emergency fund and a retirement fund both count.

Create financial goals

Once you have an idea of your financial obligations, it’s time to create realistic financial goals. What are your financial priorities? Will you commit to spending less? Paying off debt? Starting a retirement fund? Sit down and give some thought to your financial goals to turn them into a reality.

February: Create a budget

Use the financial health check-in as the foundation of a budget. A budget is basically a spending plan. And it can align financial behavior with larger goals.

No. 1: Sort needs and wants

If reducing spending sounds impossible, try this. 

The concept of needs and wants is a core principle of financial literacy. Needs and wants help you balance your budget. They help you cut expenses without cutting out the things you need. And fortunately, the concept isn’t hard to understand — it just requires practice.

At their core, “needs” are the things that we have to have in order to live a healthy, happy life — food, clothing, shelter, and health. “Wants” are things like designer clothing, upscale dining, and sports cars.

Categorize your major expenses. Compare the amount you made to the amount you spent. If you need to cut down on expenses, trim the non-essentials. Then use your insights to create a financially healthy budget.

No. 2: Pick a budgeting method

There are several other budgeting methods out there to help you track your spending and saving. So pick one and get started.

• The envelope budgeting method relies on cash and envelopes to curb overspending.
• The 50/30/20 budget divides income into three broad expense categories: needs, wants, and savings.
• The 80/20 budget prioritizes savings without meticulously tracking all the other expenses.

March: File taxes

Tax season officially begins January 1 and lasts until mid-April, when personal and business taxes are due.

For those who are new to doing taxes, all the forms and numbers can feel overwhelming. But with the upcoming deadline, now is the time to learn how to file your federal income taxes. Especially if you haven’t filed yet!

Fortunately, many people are eligible for free tax preparation services — including a majority of young people who have simple taxes.

First, figure out your filing status. Next, sort out the documentation you’ll need to file. Then, get it done!

The Internal Revenue Service (IRS) lists online tax services available to those who need to file federal and state taxes quickly, easily, and accurately. The options include TurboTax and H&R Block, among others. The best part? Each site is free — as long as you meet eligibility requirements.

April: Learn about personal finance

It’s National Financial Literacy Month! This initiative is recognized in the United States during April in an effort to highlight the importance of financial literacy and teaching Americans how to establish and maintain healthy financial habits. It’s the perfect time to get involved in financial education programming.

Take advantage of free events and outreach done by local colleges, universities, nonprofit organizations, businesses, and financial institutions in your community. Don’t see any local events? Sign up for an online course to focus on the financial area you’re least comfortable with.

May we suggest OppU, our standards-aligned financial literacy curriculum? Use the interactive online lessons as a guide.

Call it financial literacy 101. Call it financial literacy fundamentals. These are the essential personal finance lessons you need. Here are the core concepts it covers:

• Spending
• Budgeting and saving
• Credit
• Debt and loans.

May: Contribute to savings

This month, commit to learning how to save, but do it in a fun way. Create a saving goal by choosing something to save for. Maybe start with something practical, like putting aside money for a downpayment. But then choose something that you’re excited about. Is there a trip you want to make? Begin saving and make it happen.

Building an emergency fund is the best way to make sure that unexpected emergencies, like a job loss or health care bills, don’t throw you off track. Already have one? Challenge yourself to bulk it up by saving three to six months’ worth of expenses. This will create a comfortable cushion to fall back on, making your present and future a little more secure.

No. 1: Savings goals worksheet

A savings worksheet will help you organize your savings goals by including the necessary information needed to achieve them. The savings challenge worksheet will motivate you to start saving this week and keep it up for an entire year.

No. 2: Savings challenge

The 52-week savings challenge is a strategic and motivational savings plan. Participants deposit money in incremental amounts — adding up as the challenge progresses. Save up $1,378 within one year. That’s a significant contribution for a well-funded account.

June: Build credit 

When was the last time you checked your credit report? And do you know your credit score? 

Consumers can request one free copy of their credit report each year from each of the three credit reporting companies. So do it!

Your credit report will give you an in-depth, accurate picture of your financial health. It will list your account information and payment history, telling you exactly to whom you owe money and how much you owe them. It will also show any payments that entered delinquency or default.

When you request it, the credit bureaus may also provide an estimate of your credit score, which is what lenders look at when considering a loan or credit card application. Essentially, it represents your ability to pay back debts, and the higher your score is, the more likely you are to be approved and receive a good interest rate.

After checking your credit report and credit score, make a commitment to improving your credit. Take the following steps:

• Keep credit card utilization under 30%.
• Pay off credit cards in full each month.
• Make on-time payments.
• Keep accounts open and in good standing. 
• Keep hard inquiries down by not applying for new credit. 
• Dispute errors on your credit report.

July: Invest

Investing should be a high priority resolution. If not, you’re likely missing out on big returns. And the earlier you start investing, the more you make. Even if you only invest a small amount of money to start, the interest will pay dividends later.

But investing isn’t for everyone. Maybe you have debt. Maybe your savings are slim. In these cases, timing is everything. Here are four signs you’re likely ready to start investing: 

• You already have a financial plan. 
• You established an emergency fund.
• You recently got a raise or a bonus.
• You’ve learned about investing — how to and where.

August: Pay off student loan debt

August is when colleges welcome students back to campus and classes kick into full swing. Are you currently a student? Do you have any debt remaining from when you were? August is the month to take action.

Paying off student loans won’t happen overnight. Take stock of your debt and choose one of two debt repayment methods to make it happen. 

The Avalanche Method

Organize each student loan from the highest interest rate to the lowest. Total the minimum payment amounts owed. Don’t know your minimum payment? Estimate it. You need the balance, interest rate, and the number of years required to repay. Determine how much extra to pay beyond the minimum and view it as an “avalanche payment.”

The Snowball Method

Organize student loans from the smallest balance to largest balance. Determine how much extra to pay beyond the minimum monthly payment. Deposit that money toward the smallest student loan as a “snowball payment.”

September: Reduce credit card debt

One of the most common forms of debt is credit card debt. It’s never too late to end the cycle of minimum payments, high-interest rates, and fees. The faster you pay off your credit card debt, the closer you’ll be to achieving financial freedom.

If you have more credit card debt than you’d like, write down a detailed payment plan and work toward getting those credit card balances back to $0. 

Carrying a balance from month to month accrues interest. Focus on reducing the amount owed to below 30% of your total available credit. This credit card utilization ratio is one factor used in determining a credit score. To improve credit score and reduce debt follow these additional steps:

• Stop racking up new debt.
• Consolidate or transfer the balance of existing credit cards.
• Choose a repayment strategy — like the avalanche or snowball method. 
• Free up extra money to put towards debt.
• Tap in to free counseling resources to stay on track.

October: Face financial fears

Money can be an intimidating topic. For the spooky month of October, it’s time to face your financial fears. To achieve financial goals, it’s important to approach the issue with confidence. Here’s how to overcome your fear of money and take control.

Are your finances too scary to even look at? Are taxes your boogeyman? Maybe you’ve always wanted to invest but feel nervous about putting money in the stock market. Whatever it is that keeps you up at night, muster your bravery and show it who’s boss.

• Acknowledge the fear of money.
• Identify the cause of the issue.
• Talk about the fear.
• Take action to overcome it.
• Treat yourself with kindness.

November: Donate to a charitable cause

In November, many people choose to make charitable donations. In fact, Giving Tuesday occurs after Thanksgiving. If you’d like to join in charitable giving, ask yourself a few important questions.

Like how do you get started? 

Here are answers to your questions so you can support the causes that matter to you. 

• Identify an important cause.
• Choose a reputable organization.
• Decide how to give — by check, online, or in person.
• Determine if a donation is tax-deductible.

Where will you donate? 

Find the right organization by using a site like Charity Navigator, which is a trustworthy resource for assessing the quality of charitable organizations. For those without extra money to give, consider Kiva, which allows you to invest with reimbursable loans as opposed to donating. It’s a great alternative for those without enough extra income set aside for donations.

Is your charitable contribution tax-deductible? Check the IRS’s tax information for contributors to search eligible organizations, learn how to report contributions, and read useful tax tips. Also, ask if your employer offers matching donations to make the most of your giving.

December: Review and plan

Congrats on making it through the year!

It’s time to review your financial goals. How did you do? Hopefully, you completed the highest priority financial resolutions. What areas were challenging and why? Maybe you didn’t pay off all of your debt or you splurged breaking your budget. And that’s okay! Remember that your personal finance journey is just that: an imperfect journey with plenty of room to learn and grow.

Now is a good time to start looking toward next year. Organize and plan your finances and resolutions

Use a personal finance bullet journal

If you want to organize your financial goals — with a dose of creativity and fun — then look no further than a bullet journal for personal finance. Bullet journaling can help you reach your financial goals by keeping you organized and accountable.

With your financial goal in mind, pick a related bullet journal “spread,” also known as a layout or design. The most common financial spreads include:

• A budget planner to track income and expenses
• An income tracker to track a fluctuating income
• A savings tracker to stay on track with short- and long-term savings goals
• A debt payoff tracker to create a system to pay off debt.

How to stick to New Year’s resolutions

Here's what the experts have to say about sticking to New Year's resolutions

No. 1: Identify your core values

Charlotte Darr, founder of Save Live Thrive LLC

If you want to stick to financial goals in the new year, it's important to first identify your core values. Your values are what we find most important in life, and are the belief systems that guide, influence, and motivate your daily decisions.

When setting financial goals, you want to make sure that they are directly aligned with your core values. For example, if someone has value of security, that could lead them to the financial goal of paying off debt. 

When your goals are aligned with your values, you are much more likely to stay motivated to achieve them.

No. 2: Break down resolutions into small steps

Steffa Mantilla, CFEI and founder of Money Tamer

When setting a New Year's financial resolution, it's important to break down your larger long-term goals into smaller resolutions. For instance, if you want to maximize your retirement contributions next year, you may need to have a few steps built into your resolution. They may include looking over your budget, decreasing spending in one area, and maybe even working extra overtime or a side job.

By breaking your resolution into smaller steps, it's more manageable and you have a higher likelihood of sticking to it. Broad resolutions without concrete ideas are simply wishes. So if you're serious, writing down the steps makes your chance of success much higher.

No. 3: Create an accountability buddy system

Sandy Yong, personal finance author of “The Money Master”

Having an accountability partner or buddy system can help you reach your financial goals. This could be a significant other, friend, or family member where you feel comfortable sharing your financial goals. They can help motivate you and keep you on track to ensure you are successful. You should choose someone you can confide in and someone who won't judge you based on the decisions you make. Remember it's okay to make mistakes and to adjust your goals on a quarterly basis if needed. Don't give up if you don't succeed right away, it takes time and patience to reach your financial goals.

Bottom line

Ready to make a change in the new year? Start strong with these 12 financial resolutions — one for each month. 

Charlotte Darr is a money coach and the founder of Save Live Thrive LLC, a money coaching business that helps millennial women save money.

Steffa Mantilla is a Certified Financial Education Instructor (CFEI) and founder of the personal finance website Money Tamer. She aggressively paid off over $80,000 in debt and now teaches others how they can get their finances under control to do the same.

Sandy Yong is a personal finance author of “The Money Master: Inside Secrets On How To Make Your Money Grow and Stay Safe.” As a professional speaker and toastmaster, she has educated female millennials on how to invest their money wisely. Her vision is to help people feel comfortable conversing about money and mental health, as both can be sensitive subjects that impact our daily lives.