Your personal finances should always be a work in progress. There will always be new ways that you can improve your finances by spending a little less or finding new ways to invest. That’s why in 2021, I am revamping my finances with the goal of spending less and investing more.
You might be thinking “why do I care how YOU are re-vamping YOUR finances?” Well hopefully, you’ll be able to apply some of these ideas and tactics to your own finances this year and find the motivation to come up with your own 2021 financial goals.
My personal finance goal this year is to save more so I can invest more and become more financially independent from my 9-5 job.
Here are some ways that I am working to accomplish that goal:
Cut back on impulse grocery spending
This is one of my biggest spending inefficiencies. I freaking love Whole Foods & tend to get a little crazy there. When I’m at the grocery store, it’s so easy to go overboard with spending on snacks and prepared foods that I could make at home for much cheaper. I’ve also gotten into the habit of grabbing a bottle of wine or two each trip to the grocery store, which adds up quickly.
In 2021, I plan to be more intentional with my grocery shopping by planning meals, writing shopping lists, and sticking to those lists.
It’s ok to splurge every once in a while, the problem comes when it morphs into a habit. And unfortunately, I’ve gotten into the habit of spending $10 on pre-made chicken salad when I could EASILY make the same thing at home for $4.
Reduce spending on in-person fitness classes and instead utilize free workout classes on YouTube or Peloton Digital (currently $12.99/month)
Let’s be honest, trendy workout classes like OrangeTheory and F45 are expensive! While I enjoy going to them and they do help motivate me, I think I could get the same result for a much smaller price tag.
Not to mention we are still in a pandemic as I’m writing this, which is another reason to skip the pricey in-person classes and take advantage of free and less expensive digital resources at home.
All you need to do this is a TV (laptop or tablet could work too), a yoga mat, and maybe a set of dumbbells depending on the type of workouts you prefer. I enjoy HIIT workouts and you can find plenty of body-weight only HIIT workouts on YouTube for freeeee.
And if you want to step it up a notch, you could try a Peloton Digital membership. It’s $12.99 per month with a 30-day free trial, and they have a wide range of classes available, including Yoga and HIIT.
Limit eating out to once per week
It’s tempting to eat fast food or order delivery when you’re hungry and don’t have any prepped food at home. To combat this temptation, I’m going to try to plan my meals better so I can’t use the “we don’t have any food at home” excuse anymore.
I didn’t realize how much money I was spending at restaurants and bars until everything shut down in April 2020. I was shocked at how much more money I was able to save, solely because bars and restaurants were closed in Dallas.
This is the largest discretionary spending category for most people, and I didn’t even realize I fell into that bucket!
Don’t order alcohol with food at restaurants
Isn’t it amazing how much the restaurant bill increases once you turn 21?! Really though, alcohol at restaurants always has a huge mark-up. I don’t think there’s anything wrong with having a few drinks with friends, but a glass of wine with dinner isn’t always necessary.
Cut back on wine consumption
I’m sensing somewhat of a theme here…..
But in all honesty, this is easily the most expensive beverage that I consume, usually about twice a week. I definitely won’t be cutting it out completely, but maybe limiting it to special occasions as much as possible.
Sell any books or DVDs that we no longer use
Does anyone still use DVDs?? We have an entire bookshelf of DVDs that we rarely use, and books that we’ve already read with no plan to read again. There’s no reason for them to sit around our house and collect dust, so we are going to sell what we can and make a little extra cash.
Find at least 1 new source of income
Wealthy people never have just 1 stream of income. Currently, my income streams are:
- My 9-5 job
- Interest from a high-yield savings account with Ally Bank
- Dividends from index funds
- Capital gains from index funds and retirement funds
Adding a 5th source of income will make me less dependent on a 9-5 job and would ease the burden if something were to happen to that primary stream of income. I’m not sure what this new income stream will be yet. I’ve been taking this blog and my YouTube channel more seriously as of late, so ideally I will be able to start monetizing one of those in 2021. But if all else fails, I think delivering for InstaCart is a viable option.
Invest $1,000/month in an index fund
This will go towards increasing income streams #3 and #4. Index funds will always be my investment of choice because the diversification is done for you, just make sure you are choosing a fund with a relatively low expense ratio.
Index funds are also liquid investments, meaning you could easily sell shares and have cash within a couple business days. This is why I am comfortable keeping most of my savings and emergency fund in an index fund. Were there ever an emergency in which I needed $10,000, I would have no problem putting that amount on a credit card and immediately selling index fund shares. I’d have the cash in a couple of days and be able to pay the credit card bill before it accrues any interest.
If you’re not investing in index funds already, you need to start!
Check out this blog post for more information about index fund investing: https://byamandanicole.com/smart-investment-decisions-to-make-in-your-20s/
Pay off my car and student loans
These are the only 2 forms of debt that I have, aside from my home mortgage. While the interest rates on both are low, I mostly want them paid off to help increase my credit score and keep them from looming over my head. Ideally, I would prefer the only form of debt I have to be my home mortgage and I think I can make that a reality in 2021.
Max out my 401(k) contributions this year
The maximum 401(k) contribution that you can make in 2021 is $19,500 if you are under 50 years old. I’ve never maxed out my contributions before. I’ve always just contributed the maximum amount that my employer would match, which usually ends up being around $5,000.
Saving for retirement, especially in your 20’s and 30’s, is important and I, like many others, have put it on the back burner. Why? Because retirement seems so out of reach. I’m currently 35 years from retirement….which is longer than I’ve been on this earth. So it’s hard to fathom that I will someday get to that point in life. But if I don’t save for it now, then I will not only have to worry about my fragile, decrepit body when I turn 60, but I will have to worry about an empty bank account as well!
I hope that you’ve gained something from reading these 2021 financial goals. Writing them down and publishing them will definitely help me stick to them, and I’d recommend that you do the same. Hold yourself accountable and find others to hold you accountable as well. Make 2021 your most financially sound year yet!
