Over the last few years, my New Year’s blog posts have fit the reflective nature of the occasion. Last year, I guided my readers through a financial audit designed to help you take stock of where you are today and create a goal for the future. The year prior I talked about the importance of setting your intention for the year, rather than creating New Year’s Resolutions that might fall by the wayside within a few weeks. I still commend these posts to you.
This year, with so much about 2021 feeling up in the air, it’s easy to feel like your financial life is on hold as well. You may be tempted to let 2020 run right into 2021 without setting any new goals or even taking stock of your finances. While I certainly understand the temptation, a little intentionality can go a long way in helping you stay on track for your financial goals. I encourage you and your partner to set aside a few minutes to answer these three questions:
What do you want to continue doing in 2021? Think back over 2020: What healthy habits did you pick up? What goals have you been working toward? What’s been working in your financial life that you want to continue doing this next year? When my husband and I did this activity, the biggest thing that came to mind for us was saving. We’ve created a solid system over the last few years to help us incrementally reach our various savings goals. In 2020, we reached a critical emergency fund milestone, three months of expenses saved, and we want to press on to reaching our final goal of at least 4 months of savings. We also used our system to get my husband’s Jeep, which we purchased last fall. We want to continue to use this process to meet our other savings goals.
Tip: While you may be tempted to quickly press ahead to the things you want to start and stop doing, don’t! Ideally, this is the question that should take the longest to answer. Celebrate the good habits you’ve created — big and small — that are working for you and make sure you’re on the same page to keep doing them in 2021.
What do you want to start doing in 2021? Once you’ve identified what you’re already doing well, dream big about what you’d like to add to your financial plate in 2021. Is there a goal you want to focus on? A bad habit you’d like to break? Beware of making this a “laundry list” moment of every possible thing you’d like to take on, or of having one partner dictate to the other what needs to be done. Instead, decide on one new thing you’d like to focus on together in 2021. Now that my husband and I have made good progress on our emergency savings, we are shifting our focus to retirement savings. We want to find out if we’re on track for our retirement goals and make any needed changes.
Tip: Since you only have one goal you’re going to focus on, be as specific as you can. What are you trying to achieve? How will you measure it? Can it realistically be accomplished this year or is this a multi-year goal? Make it SMART, simple and doable. You might focus on paying off your debt on one credit card, adding in one new savings habit, or buying organic when you can. The simpler the better! Once you attain this goal, then you can proceed on to picking a new one.
What do you want to stop doing in 2021? Bring the conversation to a close by naming one thing you want to kick to the curb this year. Again, make this as simple and specific as you can. You can come up with a goal together or each make one on your own. Avoid identifying what you think your partner should stop doing — that’s not likely to work out well. One thing my husband and I would like to stop doing this year is not planning ahead for seasonal mid-level expenses. We’re good at saving up for the really big things (like cars, trips, or computers). But we’ve found that expenses like renewing our cars’ registration and tabs hit our budget pretty hard that one time of year they come up. Instead of taking a once-a-year hit, we’re going to save up a little bit each month throughout the year to lessen the blow.
Tip: As you decide what you’re going to stop doing in 2021, take time to clarify how much accountability you’d like from one another in making that goal happen. For instance, if you set a goal to stop shopping online after 10pm, do you want your partner to stop you immediately when they see you doing it or just check-in with you afterwards? Will you have a code word you can say to each other to remember your goal when you’re starting to go off course?