“By failing to prepare, you are preparing to fail”…Benjamin Franklin
Are you as ready as I am for the end of 2020? Honestly, I have never looked more forward to New Year’s Day as I am this year. From the Pandemic to social injustice and unrest and the political election – I need to recharge my focus spiritually, emotionally, mentally and financially!
Today we’re going to focus on smart money moves to make now help improve your finances for 2021. We’re going to talk about these top 5 Master Money Moves for you to make today:
- Create Financial Goals for 2021 – What’s Your Why?
- Create a Savings and Debt payoff strategies for 2021
- Start your Financial Blueprint
- Review your Auto Insurance Coverage, Subscription Services and Annual Memberships
- Commit to improving your Financial Literacy
“BEGIN WITH THE END IN MIND”
Create Goals
I want you to think about what you want the end of 2021 to look like for you. Don’t limit yourself – if you could dream the best possible financial outcome for yourself at the end of 2021, what would it look like?
➢ Would you have $10K in your emergency fund?
➢ Would you have a brand-new home?
➢ Would you pay-off your student loans?
➢ Would you be making more money?
Write down your financial dreams in a notebook, on your phone, computer or tablet. Doesn’t matter where but the key is to write them down. Actually, writing out your financial goals makes them more real – it verbalizes what you may think is only possible in your mind. Create as many goals as you want but I also encourage you to prioritize your goals. Each year I create at least 5 financial goals. I typically limit myself to five goals to start because anything over five feels a bit intimidating.
Also, at a minimum I like to make sure that I have at least two goals because throughout the year things will happen that may slow or speed up my progress and having more than one area to focus on helps me to maintain momentum if one goals slows down or gets off track. Here are three examples for my Financial goals for 2021:
➢ Save $5K for Hustle Teen’s college moving expenses, including books and supplies
➢ Add $5K to “New Window Sinking Fund”
➢ Reduce mortgage debt by $35K
When your first writing down your goals, simply list them to get them all down on paper. Once you’ve got it all down, I want you to take a step back and start to think about which ones are critical and necessary to your overall financial health in the new year? Deciding which goals are critical and necessary will help you narrow your focus so you aren’t overwhelmed by trying to do it all. Not every goal will or should make the cut and that’s okay. It doesn’t mean that goal or dream isn’t important, it just means it isn’t critical for you to accomplish in 2021. One of my goals that didn’t make the top 5 cut included remodeling my kitchen cabinets.
While changing the aesthetic of my kitchen is important to me, it isn’t critical or urgent when compared to making sure my soon the be college freshman has all that he needs to begin this next phase in his life. Saving for those cabinets will happen and who knows if I am able to achieve one of my goals ahead of schedule it allows me to bump another one onto the priority list!
“Hope is not a strategy”…Vince Lombardi
Make A Plan!
The next two Master Money moves are critical to successfully achieving your goals for the new year. Having a strategy for success is a plan of action designed to help you achieve your goals. You have to have a clear plan with key actions to take to increase your savings and to pay down debt. Below are a few strategies I like to use to reach my savings goals each year:
➢ Create a year-long money savings challenge
Many are familiar with the 52 week savings challenge where over the course of the year you commit to saving a set amount of money each week. Having a visual reminder of what I am committed to saving and my progress really helps to keep me motivated throughout the year. There is no better feeling than seeing your bank account grow and knowing your getting closer to your goal. The Hustle Girl Financial free 52-Week Savings Tracker can help you get started! Our tool is simple to use and we’ve included an on-pace thermometer so you can keep track of your progress each week as you save.
➢ Make it Automatic
Don’t leave it up to chance, automate your savings on a weekly, bi-weekly or monthly basis depending on how your income come in. If you’re paid weekly, create an automatic transfer to occur each week when you are paid. Make the automatic transfer recurring so that you only have to set it up once! I set up my recurring deposits at the beginning of the year and have them recur through my last paycheck of the year. Making it automatic reduces the chance you will forget or fall out of the habit.
➢ Create a separate Savings Account
I like to keep my savings separate from my every day checking account. By doing this it reduces the risk that I inadvertently spend funds meant for savings. For short savings goals I also like to use an online savings vendor such as Ally or a Capital One 360 account which is different from my primary bank. These types of online accounts require at least 3 days to transfer money from those accounts to your main checking account. That means it must it must truly be an emergency financial need that causes you to withdraw money from the account for something other than it’s intended use. I am using my Ally money market account to save for Hustle Teen’s expenses and the good news is it will learn a slightly higher interest rate than a traditional savings account.
Now let’s turn our attention to reducing debt. There are multiple strategies you can use to payoff debt including the Debt Avalanche, or the Debt Snowball method to name two of the most popular. The method you choose should be the one that will help you reach your payoff goal for the year. It should be the method that will keep you encouraged and motivated! Unless you are a nerd like me, paying off debt and pouring over spreadsheets is not FUN. Paying off debt can become boring, tedious and there will be times where you will want to skip making an extra payment, add to your balance or stop debt payoff all together. Don’t worry we’ve all been there which is why the method you choose to work more for your emotional Money Mindset versus if you pay a little more interest using the debt snowball. Personal finance is 80% behavior (or how you feel, think and act about money) and only 20% financial knowledge. This is why at Hustle Girl Financial we help clients create a plan that will work for them taking into account their money mindset and their finances. If you need help determining the right plan for you, check out our Financial Coaching services so we can help you create a debt payoff strategy today!
“Failure to create a plan for your finances is the doorway to average living”…Sujit Lalwani
Create a Financial Blueprint
A Financial Blueprint is so much more than just a budget because you are not only going to identify your income and expenses but you’re going to create a specific purpose for each dollar and monitor throughout whether or not it’s performing the way you need it to. Every dollar in your blueprint should be performing a function to move you closer to your financial goals. If your goal is to payoff a certain amount of debt, your blueprint should reflect paying down debt; your blueprint should reflect you responsibly paying all expenses and debt on time. Your Financial Blueprint should also reflect you paying yourself through saving and investing. Your blueprint should be a holistic view of your financial life.
At the beginning of the year I like to take on the challenge of creating an Annual Financial Blueprint. I layout what all our expected income is going to be and I include our income from normal 9 to 5 jobs and income from our businesses or side hustles. Next, I take a look at what our expected expenses and debt are for the year including normal household expenses, educational expenses, and sinking funds for things such as car maintenance or household repairs. Finally, we discuss our giving, savings and investing goals for the year and what we’d like to accomplish. Although it sounds overwhelming it’s actually very helpful to see the entire year laid out. This allow us to discuss what adjustments might need to be made or where we might need to adjust our expectations. It also allows us to look back over the course of the year to see how we’re doing.
If an Annual Financial Blueprint feels overwhelming when you’re just starting out, you can start out with a monthly blueprint. Your monthly blueprint should include your expected income, your expected debt and expenses and your giving, savings and investing goals. Make sure to give every dollar in your blueprint a purpose! Each dollar whether it is being spent, saved or used to payoff debt should have a specific job to complete. At the end of your blueprint it should net out to zero – which means all of your giving, savings, debt and expenses should equal your income.
You can also create a blueprint by paycheck until you’re more comfortable with a monthly or annual plan. In an upcoming Money Matters workshop, we’re going to explore all the steps of how to create a Financial Blueprint.
The #4 Master Money Move is to review your Auto Insurance, Annual Subscriptions and Memberships. I don’t have a catchy quote for this but it’s a very important tactic you need to take at least yearly. It’s not fun and can feel tedious but be like Nike and “Just Do It”! Ok maybe I do have a quote for this section.
“Just Do It”…Nike
Review Auto Insurance, Subscriptions and Annual Memberships
Most people would rather get a root canal than review their Auto Insurance coverage, trust me I get it. As a 16-year Insurance Finance Professional I know how boring and complicated delving into your auto insurance can be. But taking the time to do an auto insurance review with your insurance company or your agent could actually save you money. Most people don’t know that if your credit score improves you may qualify for a lower auto insurance rate or if you bundle auto and homeowner’s insurance or even auto and renter’s insurance you can qualify for a multi-policy discount. Dong a review with your company and making sure you know what you’re be charged for is important when you shop around with other carriers. Many carriers will try to match or beat what you’re currently paying for the same level of coverage if you know what you have. Be sure to check out our Auto Insurance Do’s and Don’ts checklist to prepare you for the review.
Before the New Year starts is also a good time to review your subscription services and annual memberships. Often, we have clients that forget they’ve signed up for recurring subscriptions or annual programs until we do a review of their expenses. It’s also a good time to call companies to see if you can get a better subscription rate. Because of the pandemic most businesses are anxious to retain customers and keep them happy and are more willing to provide incentives to keep you with their company. Make a list of all the companies you want to reach out to and set aside an hour every week before the New Year to reach out and see what savings or enhanced benefits you can receive.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for”…Robert Kiyosaki (“Rich Dad, Poor Dad”)
Commit to Improving Your Financial Literacy
One of the biggest reasons I founded Hustle Girl is because I wanted to help families increase their financial literacy. Truly we do better when we know better and while it has gotten better teaching our children, young adults and ultimately ourselves the basic fundamentals of personal finance and money management is well behind where it needs to be. There was no personal finance class available when I was in middle or high school, I don’t even remember one being offered in college. Many of us have grown up without being given the basic tools needed to successfully manage our financial lives. Many believe it’s too complicated or you need an advanced degree – but I’m going to share a secret with you – it’s really not that complicated! I chose the Robert Kiyosaki quote to prove my point – creating true lasting generational wealth boils down to what you keep, how you make it grow and how you teach the generations to come to keep it.
Each year I commit to learning something new that will benefit myself or my clients in the world of personal finance. I also commit to my continuing education, even though I have an MBA in Finance and Accounting each year I participate in various courses and certifications to keep my knowledge and skills sharp. This year I am a candidate for AFC certification which I’m really excited about!
Here are a couple of ways you can commit to improving your financial literacy in 2021. And don’t just limit the learning to yourself, encourage your partner or spouse to learn with you and most importantly involve your kids! Start talking with your children early about money, teach them to have a savers mindset. Leverage the Hustle Girl Financial Kids Savings Challenge to make it fun for them!
- Read books on Personal Finance – below in no particular order are three books I have personally read and would highly recommend
➢ Rich Dad: Poor Dad – Robert Kiyosaki
➢ Your Money or Your Life – Vickie Robin
➢ The Millionaire Next Door – Thomas J Stanley
2. Listen to Personal Finance podcasts – while I know for many of us our daily commute might look different but find 30 minutes to an hour a day and listen to personal finance podcast
➢ Afford Anything podcast – Paula Pant
➢ The Dave Ramsey Show podcast – Dave Ramsey
➢ Stacking Benjamins podcast – Joe Saul-Sehy and Josh Bannerman
3. Work with a Financial Coach – having someone that can help teach you the basics of personal finance and help you create a plan for success. Of course we recommend joining the Hustle Girl Financial family! We offer a variety of products and services that can help you improve your financial literacy.
➢ See our comprehensive list of products and services
➢ Join our monthly Money Matters workshop
Let’s put 2020 behind us and commit to going into 2021 making smart money moves and using these five steps to master your finances!
Until next time fellow Hustlers, I wish you love, peace and a whole lot of Hustle!