It’s so easy to blame your finances on outside factors. The cost of living is too high. Your boss refuses to pay you a fair wage. You’re still paying off your college debt. While you can make excuses until you turn blue in the face, the fact is that you, and only you, are in control of your financial present and future. If you want to make 2021 the year you get ahead, set these five financial goals for yourself — and exercise the discipline to stick to them.
1. Create a Financial Plan
You can’t get to your destination without a roadmap, and you can’t reach your financial goals if you don’t have a plan. Creating a financial blueprint may seem daunting at first, but once you get started, it’s really not so difficult.
Begin by creating a budget. Yes, we said the dreaded “B” word. Look at your income to determine how much you can reasonably afford to spend on a monthly basis. Include all sources of revenue, such as your paycheck, earnings from a side-gig, alimony, child support, interest, rental and dividend income. Once you have a firm idea of how much you have coming in, it’s time to calculate how much you’re putting out.
First, list fixed expenses. These include rent, credit card payments, cell phone payments, utilities, car insurance, auto loan payments, internet and cable. Account for variable expenses, which include things such as food, entertainment, home repairs and car maintenance.
Compare your income to your expenses. Make adjustments where you can so you begin to save enough each month to meet your year-end goal.
2. Repair Your Credit
Interest on credit card debts, auto loans, personal loans and other forms of credit can really eat into your savings. To avoid losing thousands of dollars in interest each year, and to create more opportunities for yourself, take measures to fix your credit today.
Begin by listing all your outstanding obligations, monthly payments, interest rates, due dates and creditors. Login to each account, or call each creditor, to determine your standing. If you’re behind on any payments, remit the full amount necessary to bring your accounts to current. This prevents monthly late fees, which can range anywhere from $3 to $39.
Once your accounts are current, commit to making the minimum monthly payment each month. However, pay more where you can and try to pay off the debts with the highest interest rates first. Getting your credit in check this way will serve to boost your credit score and get you closer to achieving your overall financial goals.
3. File Your Taxes
Tax season is fast approaching and, like it or not, you need to file. Filing ahead of the April 30 deadline is worthwhile since it ensures you will receive credit and benefit payments such as the GST/HST credit, income tax benefit, Canada child benefit and guaranteed income supplement. If you live in Ontario, New Brunswick, Manitoba or Saskatchewan, you may also qualify for the Climate Action Incentive.
4. Settle Debts in Collection
A collection debt is one you were unable to pay back in time. Having a debt sent to collections can significantly hurt your score. After the initial drop, your credit score — and the ability to obtain a loan — will continue to suffer. Getting a debt out of collections may not be fun since it can mean paying back a large portion or all of what you owe. However, taking care of the debt is necessary if you hope to get a fresh financial start.
To settle an account in collections, you have two options. The first is to call the collector and try to negotiate a settlement in exchange for removing the account from your credit report. This often works even if the settlement is less than what you owe.
You will have to resort to the second option if the first doesn’t work. This, as already mentioned, involves offering payment in full in exchange for the removal of the account.
5. Make Long-Term Goals
Like proceeding without a plan, moving forward without any specific goals can make your efforts feel futile. Start with a simple objective, such as paying off all debt. Once you accomplish that, or your payments are more manageable, add a second goal, such as creating an emergency fund. As soon as you have an emergency fund in place, add another significant goal, such as saving a down payment for a home.
Keep working in this manner. As you achieve one goal, replace it with another. Always having a goal in mind will help keep your resolve even when the going gets rough. More importantly, with each goal you achieve, you’ll feel a sense of accomplishment and the motivation to keep going.
Get the Help You Need
You don’t have to work toward your future financial goals on your own. If you need help paying down loans, consolidating credit card debt or reducing interest, search for a personal loan that can help you do all that and more.