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10 Financial New Year’s Resolutions for 2021

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2020 was an unpredictable year that had a tangible financial impact: Many workers lost employment due to the coronavirus pandemic, business owners shuttered their storefronts and families realized too late that their emergency funds were insufficient.

In the New Year, it’s more important than ever to set attainable money goals that contribute to your financial wellness so that you’re prepared for whatever the future has in store. Kick off 2021 with one or more financial New Year’s resolutions to get your finances on track.

1. Reflect on last year’s financial missteps and learn from them

No matter what your financial situation is like, you probably felt the impact of the coronavirus pandemic in 2020 in some way. Whether you racked up credit card debt or your credit score dropped because you missed a loan payment, you shouldn’t let the past haunt you. Learn from last year’s regrets and turn them into this year’s resolutions.

Here are a few examples of how you might set New Year’s financial resolutions based on hurdles you faced in 2020. Each of the resolutions mentioned below (and more) are further explained in the sections that follow.

Common financial regrets
and resolving to do better this year
Last year’s regret This year’s resolution
You added to your credit card debt Create a budget to curb overspending
You saw your credit score drop Review and monitor your credit
You borrowed too much money Consider debt consolidation to help you pay down debt
You took out a loan with a high APR Refinance the loan for a lower rate
You depleted your emergency fund in 2020 Rebuild a more robust savings net in 2021
You simply didn’t save any money Automate your savings with direct deposit

2. Plan out your budget at the beginning of the month

Tracking your expenses gives you a clearer picture of how you earn, spend and save your money so you can learn where to cut spending. But most importantly, creating a household budget helps you control how you will spend your money going forward.

Try out one of these budgeting strategies to implement this New Year’s resolution idea immediately:

 50/30/20 budget: Allocate 50% of your income toward necessary expenses like rent and utilities, 30% toward discretionary spending like dining out and 20% toward savings and debt repayment.

 Envelope budget: Organize your spending into virtual “envelopes,” setting aside an exact amount for certain expense categories like groceries, clothing and restaurants. This budgeting strategy can help you avoid overspending on discretionary purchases.

 Zero-based budget: Give every single dollar a job, like building your savings, buying groceries and repaying debt. This way, you’re putting an exact amount toward savings and you’re not tempted to overspend.

3. Download a free app on your phone to track your spending

Apps like Mint automatically track your spending via your bank accounts, making it easier to start budgeting. You can see how much money you spend on gas, groceries and even coffee without having to sift through your bank statements and sort purchases yourself.

Compare some of the most popular budgeting apps below:

3 apps for budgeting your money
App Cost Features
Albert Free or $4+/month for Albert Genius
  • Automatic budgeting that calculates income, recurring bills, savings and all other spending
  • Instant cash advances up to $100
  • Automated savings with a 0.10% annual bonus (0.25% bonus with Albert Genius)
  • Enable Albert Genius for personalized help in meeting your financial goals
Mint Free
  • Option to manually organize transactions into budgeting categories
  • Bill payment tracker with bill pay reminders
  • Unlimited free credit scores
You Need a Budget $11.99/month or $84/year
  • Follows the zero-sum budgeting rule of tracking every dollar spent
  • Goal tracking and budgeting reports to monitor your progress
  • Share your budget with a partner

4. Refinance your mortgage while rates are low

2020 was a big year for mortgage refinancing, and it doesn’t seem like that will slow down in 2021. That’s because mortgage rates are still historically low, and they may fall even lower in the new year.

Mortgage rates could fall as low as 2.30% in 2021, estimates LendingTree Chief Economist Tendayi Kapfidze. This presents homeowners with an excellent opportunity to save a substantial amount of money on interest payments throughout the life of the loan.

Refinancing your mortgage can also help you pay off your home faster or lower your monthly mortgage payments (and if you get a really low APR, you might even be able to do both). Mortgage refinancing may sound complicated, but it’s a simple way to save a lot of money. Read our step-by-step mortgage refinancing guide to get started.

5. Contribute to your emergency fund

Four in 10 Americans felt they weren’t financially prepared for the coronavirus pandemic, according to an October 2020 LendingTree survey. And without an emergency fund to fall back on, consumers are susceptible to becoming dependent on interest-bearing credit in order to cover basic living expenses.

Personal finance experts suggest that you should have three to six months’ worth of living expenses in your emergency fund. That may seem like a lot of money, but it may be necessary to have that much (or even more) if your circumstances change due to job loss or illness, for example. Use these tips to put more toward your emergency savings:

 Set up automatic contributions to your savings account.

 Put your emergency fund in a high-yield savings account to help it grow faster.

 Increase your savings contributions each month in small, manageable increments.

6. Pay off your credit card statement balance every month

Credit cards can be a powerful tool for building your credit score and earning rewards like cash back. But if you’re not paying off the entire statement balance every month, then you’ll end up paying interest on the things you buy.

Here’s the problem: Forty-two percent of credit card accounts carried a balance at some point in Q2 2020, according to a report from the American Bankers Association. This shows that many consumers aren’t paying off their statement balance in full, and paying interest on everyday purchases.

It’s imperative that you don’t spend more on your credit card than you can pay off by the time the bill is due, but it’s not always possible to avoid taking out debt — particularly after such a tumultuous year.

Make a goal of paying off your credit card statement balance each month so you can reap the rewards of using a credit card without paying interest. If you can’t pay the entire balance, you should still try to make more than the minimum payment. If you’re having trouble keeping up with your credit card spending, then you might consider credit counseling or debt consolidation.

7. Consolidate all your debt with a personal loan

If 2021 is the year to pay down your debt, then you might consider opening a debt consolidation loan. Doing so may help you save money on interest, pay off debt faster or lower your monthly debt payments.

A debt consolidation loan is simply a personal loan used to repay one or multiple debts with better terms. The goal of consolidating debt with a loan is to get all of your bills in one place and to reduce the cost of credit over time by securing a lower APR than what you’re currently paying.

Pros Cons
 Save money with a lower APR

 Pay off debt on a set timeline

 Fixed APR and monthly payments

 Can be used to pay off all types of debt

 May not be able to secure a lower APR

 Requires credit check

 May have a loan origination fee

 Missed payments hurt credit score

This isn’t a temporary fix but a debt management strategy. That means that you can’t just take out the loan and forget about it; it’s important to pay it on time every month to get your finances back on track.

Estimate your monthly payments using this personal loan calculator:

8. Improve and monitor your credit score

A good credit score can help you reach your financial goals, from buying a home to consolidating debt. When your credit history is good or even excellent, you can secure loans and credit cards with lower interest rates. You’ll also have access to more types of rewards credit cards and even balance-transfer cards with introductory 0% APR periods.

Follow these tips to improve your credit score:

 Pay your bills on time. The budgeting app Mint offers bill payment tracking if you struggle with this.

 Pay down credit card debt. This will reduce your credit utilization, which is the amount of credit you’ve used divided by the amount that’s available to you.

 Dispute errors on your credit report. Check out this helpful guide for a step-by-step breakdown of the process.

Tip: You’re entitled to a free credit report from each of the three national credit reporting bureaus — Equifax, Transunion and Experian — on You can also get your free credit score using My LendingTree, a credit monitoring tool that also helps you shop loans.

9. Increase your retirement contributions

One in four Americans believe they’ll retire later than expected as a direct result of the coronavirus pandemic, according to our survey mentioned earlier. But there’s still time to get your retirement savings on the right track so you aren’t left working well past the typical retirement age.

Try upping your contributions in small increments, like 1% to 2% of your paycheck. If after a few months it doesn’t make a big difference in your monthly budget, then you can increase your contributions another 1% or 2%, until you can’t anymore. If you’re investing in a 401(k), the most you can contribute per year is $19,500 for workers under 50. The catch-up contribution limit for those 50  and over is $6,500.

According to retirement plan provider T. Rowe Price, you should keep track of your retirement savings based on these milestones:

  • Age 30: 0.5x your salary
  • Age 35: 1x-1.5x your salary
  • Age 40: 1.5x-2.5x your salary
  • Age 45: 2.5x-4x your salary
  • Age 50: 3.5x-6x your salary
  • Age 55: 4.5x-8x your salary
  • Age 60: 6x-11x your salary
  • Age 65: 7.5x-14x your salary

10. Grow your savings with interest

Banks have abysmally low interest rates on their savings accounts — in fact, the national rate on savings accounts is just 0.05%, according to the FDIC (as of December 2020). Something is better than nothing, but your savings could be working a lot harder for you.

One simple solution is to open a high-yield savings account. As the name implies, this is a savings account that has a higher interest rate for deposits than a traditional savings account. Whereas the typical savings account interest rate can be as low as 0.01%, the rates for high-yield savings accounts can reach up to 0.80%.

High-yield savings accounts are a popular tool for many consumers because it’s relatively easy to liquidate your savings in case of an emergency, compared with a certificate of deposit or investment account. You can sit back and watch your savings grow all without any effort on your part.


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