- 7 Financial Goals to Set in 2021
- 1. Get Your Credit in Check
- 2. Get Your Taxes Done Early
- 3. Set a Budget
- 4. Make a Savings Goal for Yourself
- 5. Pay Off Bad Debts
- 6. Research New Companies to Invest In
- 7. Use a Financial Planner
- Credit Card Predictions For 2021
- How did cardholders fare in 2020?
- How did card offers change in 2020?
- What will you see in 2021 in the way of credit cards?
- Travel cards in 2021
- Hotel and airline credit cards in 2021
- Cash back cards in 2021
- Balance transfer offers in 2021
- Annual fees and no foreign transaction fees in 2021
- Sign-up bonuses in 2021
- 5 Credit Card Trends to Watch for in 2021
- 1. Contactless payments will continue to evolve
- Tap-and-go transactions
- Smart payments
- 2. Travel cards will return to their rewards roots — with a twist
- 3. This will be the dawning of the age of the 'alternative' card
- No hard credit pull required
- New ways to extend credit
- 4. Premium cards will entice you to sign up and stick around
- 5. Customer experience will be in the spotlight
- Top 6 Credit Card Tips For 2021
- 1. Don’t Leave Free Money on The Table
- 2. Make 2021 The Year of The Retention Offer
- 3. Make Sure Your Credit Cards Still Fit
- 4. Ditch Debt
- 5. Commit to a Cash-Back Portal
- 6. Start an Event Stash
- 3 Credit Card Goals to Set in 2021
- 1. No credit card debt
- 2. Earn 0 in rewards
- 3. Go up one credit score range
- 10 financial resolutions for 2021 – that are actually doable
- 10 financial resolutions for 2021
- 2. Create or freshen up your budget
- 3. Check your progress on paying down debt
- 4. Review your credit card benefits and reward offers
- 5. Review your asset allocation and rebalance your portfolio
- 6. Consider converting your traditional IRA to a Roth
- 7. Review your beneficiaries
- 8. Review your savings
- 9. Check your credit report
- 10. Continue to educate yourself
- Final thoughts
7 Financial Goals to Set in 2021
In order to achieve your financial goals, you first have to set them. Setting goals is proven to be an essential factor in finding success, and this is something that applies to all aspects of life.
One of the most important of those aspects is your financial success. Whether it’s to make an extra $10,000 this year or start investing, nearly everyone sets a money goal every year. Every high achiever and success guru does this. Warren Buffett, Tony Robbins, and my friend Brian Tracy will all tell you that goal setting is a huge part of their success.
The key to setting goals is to make a habit of setting them and revising them. I set new goals every year, every month, and every week. Heck, I even look at my goals every day and review what it is I want to achieve.
And when it comes to your finances, it is important that you get in the habit of setting annual goals. Spend time every year, before the new year to determine what you want to focus on in the coming year.
To get your finances on the right path in 2021 here are 7 financial goals you should consider setting for yourself.
1. Get Your Credit in Check
First, plan to get your credit in check. Get a handle on what your credit score is and the factors that are affecting it. If your credit score ends up being lower than you would it to be, begin taking steps to improve it, such as paying off debt and keeping the balances on your credit cards low.
2. Get Your Taxes Done Early
it or not, tax season is coming up quick. Each year, far too many people make the mistake of waiting until the last minute to get all of their necessary documents together. Avoid the stress and hassle that comes with waiting until the last minute and set a goal to have your tax documents fully prepared as soon as possible.
3. Set a Budget
Regardless of whether you are living paycheck to paycheck or have plenty of money left that you funnel into savings, setting a budget is still essential. Setting a budget allows you to exercise discipline when it comes to how much of your money is going to necessities, how much is going to recreational expenses, and how much is going to savings and investments.
By setting a budget – and sticking to it – you’ll be able to better control how you are able to reach your other financial goals.
4. Make a Savings Goal for Yourself
Once you’ve set a budget, it’s time to set a savings goal for this year. Obviously, your savings goal should be attainable, but it should also be as large as you can manage.
Remember, the more you save now, the more that money will multiply or compound as time goes on. It’s also important to note that once you’ve set a savings goal and divided out how much money you need to put aside from each paycheck to reach that goal, you should put that money aside first and foremost.
If your savings are the first part of your budget you pay, they’ll be much less ly to get left out.
5. Pay Off Bad Debts
The only financial goal more important than saving and investing is paying off bad debts. High interest, bad debts such as credit card debts and personal loans act exactly the opposite of good investments, decreasing your worth at a compounding rate, rather than growing it.
Paying off debts such as these should be your first priority, and this year is as good a time as any to become debt-free.
6. Research New Companies to Invest In
Take some time to research companies to invest in. Using the principles of Rule #1 investing to find great companies to invest in takes a little time and patience.
While you will have plenty of opportunities to buy great companies at a great price, it still isn’t extremely often that the market puts high-value companies on sale. This makes it important to start now on researching the companies that you would to invest in so that when these companies do go on sale you’ll be ready.
2021 might just be an amazing year to get amazing deals on wonderful companies that you wouldn’t be able to get any other time. That’s why saving and getting your finances in order is so important. When the market plummets, we want to be ready to take advantage of the fire sale on wonderful companies.
7. Use a Financial Planner
You are 42% more ly to complete your promises to yourself if you write them down.
There is a reason that I am a firm believer in making yourself promises, instead of setting goals.
Beyond that, writing these promises down or looking at them daily or even weekly leads to increased motivation. If you’ve ever heard, “Where your focus goes, your energy flows,” it’s completely true, and you can prove it to yourself this year.
Make it easier for yourself with this 12 Month Financial Planner that I’ve created for you. By reviewing the clear benchmarks, reviewing the monthly list of promises, adding your own, and completing challenges. Celebrate each win, no matter how big or how small, and you’ll notice how much more fun it becomes to do something that you initially thought would be ‘work’.
Whether you start this in January or put the planner into use halfway through the year, the promises and challenges will work for you and help get you focused on the financial success you’ve been striving for.
By the way:
If you really want to hit your financial goals this year, here are a few investing resources you should review.
Editor’s Note: This blog was updated for 2021 with new statistics and tips.
Phil Town is an investment advisor, hedge fund manager, 3x NY Times Best-Selling Author, ex-Grand Canyon river guide, and former Lieutenant in the US Army Special Forces. He and his wife, Melissa, share a passion for horses, polo, and eventing. Phil’s goal is to help you learn how to invest and achieve financial independence.
Credit Card Predictions For 2021
This page includes information about the Discover it® Balance Transfer product, which is no longer offered by Discover.
Rough year, 2020. Even the best credit cards and cardholders have taken something of a hit.
But we anticipate lots of credit card goodies for 2021, which we’ll go into here. First, a snapshot of the playing field in 2020.
Potential cardholders felt the impact of the economic uncertainty with a tightening of approval standards by card issuers. On the plus side, card debt and delinquencies were down.
How did cardholders fare in 2020?
With the uncertainty and job losses of 2020, lenders became more risk-averse, notes our industry analyst, Ted Rossman.
In Q2, 72 percent of credit card issuers tightened their approval standards and 0 percent eased them, according to The Federal Reserve. In Q3, 31 percent tightened and just 4 percent eased. A similar trend played out with respect to existing cardholders’ credit limits.
“A couple pleasant surprises this year were that credit card debt and delinquencies both fell,” says Rossman. “Credit card debt has been down dramatically (down 11 percent from February through October, according to the Fed). Explanations include government stimulus and consumers spending less and making debt payoff a priority.”
How did card offers change in 2020?
On the plus side, card issuers offered richer sign-up bonuses, new categories, even revamped cards in the last year. On the other hand, there was a retreat from balance transfer offers and balance transfer fees. Whether COVID-19 related or not, there were gobs of changes in the 2020 credit card landscape, including:
- Capital One Venture Rewards Credit Card and Chase Sapphire Preferred Card both saw elevated sign-up bonuses come and go.
- Blue Cash Preferred Card from American Express and Blue Cash Everyday Card from American Express both experienced boosted welcome offers.
- All American Express cards offered an extended window in their welcome offers.
- Capital One, Chase and American Express all stripped their balance transfer offers from several of their cards. Notably, Discover and Wells Fargo did not, although Discover removed Discover it® Balance Transfer.
- BankAmericard® credit card, Chase Slate and Citi Rewards+ Student left the market and have yet to return, with the exception of BankAmericard.
- American Express has added Pay Over Time to cards.
- Myriad changes designed to benefit the changing shopping dynamic have taken place, notably the changes to Chase Freedom cards.
- We’ve collected a running list of COVID-inspired limited time offers and promotions.
What will you see in 2021 in the way of credit cards?
Now for the fun stuff. What can you expect from credit cards in the next year? From travel and airline cards to cash back offers, we’ve put our predictions all in one place for you.
Travel cards in 2021
Rossman predicts a snapback in travel once there’s widespread vaccine availability. “When that happens, we could also see a raft of new sign-up and spending incentives. We’re not there yet, but once consumers get more comfortable traveling and spending, and once card issuers feel better about taking on new customers, it could be a strong buyer’s market,” he says.
A travel card to watch: Capital One Venture Rewards Credit Card
Hotel and airline credit cards in 2021
We anticipate hotel cards will feature free stays and on-property credits to encourage travel spending. “Airline cards may have a few tricks up their sleeves, too, although they’re the most ly to stand pat with their existing perks,” Rossman says.
“After an early pop of grocery incentives last spring, these mostly focused on the core value proposition of air travel. This should be more feasible in 2021, and existing credits for free checked bags and points towards free flights and elite status will be more top of mind, especially once we hit the second half of the year.”
An airline card to watch: American Airlines AAdvantage MileUp℠ Card
Cash back cards in 2021
Expect a continued move toward cash back and everyday spending categories. “Even before the pandemic, we found that most people d the simplicity and universal appeal of cash back,” Rossman notes.
We predict rewards to continue their shift toward everyday categories, such as groceries, dining — including sit-down, takeout and food delivery — and streaming. “Card issuers love sticky, set-it-and-forget it kinds of categories. I think there’s room to do more of this with categories such as cell phone bills and online shopping,” Rossman predicts.
“Partnerships involving premium access to services such as Uber, Lyft, DoorDash, Instacart and Peloton represent opportunities for cardholders and issuers a. Cardholders getting extras, and issuers can use these incentives to encourage loyalty.”
A cash back card to watch: Blue Cash Preferred® Card from American Express
Balance transfer offers in 2021
Balance transfer cards took a hit in 2020, with a number of offers being removed from the marketplace.
Mintel Comperemedia reported that card issuers sent 42 percent fewer direct mail advertisements for 0% balance transfer cards in the first three quarters of 2020 when compared with the same period in 2019.
“Card issuers were worried enough that their existing customers wouldn’t pay them back; taking on new customers with existing debt wasn’t particularly appealing,” says Rossman. “This will hopefully turn around in the second half of 2021, assuming we have a widespread vaccine and a better economy/job market.”
He predicts the balance transfer market will improve at a slower pace than other types of credit cards. “By definition, this is an audience with debt, and card issuers will be more concerned about extending this type of credit for a while yet to come.”
A balance transfer card to watch: Citi® Diamond Preferred® Card
Annual fees and no foreign transaction fees in 2021
Annual fees will continue to be offset by perks such as premium food delivery or rideshare membership as well as credits for streaming, cell phone bills, food delivery/takeout, exercise classes and so on.
“I think we’ll see less outright discounting of annual fees in 2021, but rather, marketing that ties the fee to these benefits along with ongoing rewards on key categories,” Rossman says.
Meanwhile, in recent years, foreign transaction fees have been falling steadily; in 2020, just 42 of the 100 popular cards that we surveyed charged foreign transaction fees, down from 77 in 2015.
“The good news for travelers is that it’s easier than ever to find a card that’s foreign transaction fee-free. With pent-up demand for travel, it’s a good combination,” says Rossman.
A no foreign transaction fee card to watch: Citi Premier® Card
Sign-up bonuses in 2021
In early to mid-2021, enticing sign-up bonuses will pop up, although approval standards will remain tight, and issuers will be looking for the most creditworthy and affluent applicants.
“We saw some of this in late 2020,” Rossman says. “I think the bonuses will become more widely available and less restrictive in the second half of the year. In early 2021, the best offers will probably be reserved for those with high credit scores and high incomes.”
A sign-up bonus card to watch: Southwest Rapid Rewards® Plus Credit Card
The information about the Bank Americard credit card and American Airlines AAdvantage MileUp Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
5 Credit Card Trends to Watch for in 2021
The COVID-19 pandemic forced credit card companies to make dramatic changes in 2020, some of which will continue into 2021.
Many issuers tightened their underwriting, leaving consumers with fewer card options to choose from if they had less-than-good credit. Balance transfer cards all but disappeared, with some exceptions for those with excellent credit. Travel rewards cards raced to remain top-of-wallet at a time when travelers were canceling trips in droves.
- Extended time frames to earn sign-up bonuses.
- Statement credits that took the sting otherwise high annual fees, or credits toward purchases at specific merchants.
- Bonus rewards on groceries, streaming subscriptions, food delivery and other stay-at-home purchases.
- The ability to redeem travel points toward nontravel purchases at the same value per point.
There’s no telling when things will return to normal, or what “normal” will even look later in 2021. But as the year progresses, some of these limited-time perks may be quietly eliminated in favor of benefits that are tailored toward consumers who are itching to get back out into the world.
Here are five trends to anticipate in 2021:
1. Contactless payments will continue to evolve
The world we live in now is one of elbow bumps and those metal hooks you can carry around to open doors. Naturally, this touch-averse mentality extends to what was already viewed as germ-infested: money. Before, contactless technology was a convenience. Now it’s a necessity.
Credit card issuers in the U.S. were already adding contactless capabilities to credit cards before the pandemic, but consumers’ desire to touch as little as possible while shopping has accelerated the adoption of the technology.
According to an April 2020 American Express study, 58% of consumers who have already used contactless payments said they’re more ly to use them now than they were before the pandemic.
In a Mastercard study also from April 2020, 79% of consumers worldwide said they were using contactless payments.
Imagine a refrigerator that notices when you’re running low on groceries and orders them for you, a washing machine that senses when you’re due for another bottle of detergent, or a car dashboard where you can order takeout or pay for gas. This isn’t the first time we’ve heard of the possibility of this technology, but the pandemic has increased consumer demand for creative ways to transact without leaving your home or car. (Maybe in 2022, we’ll finally get those jetpacks.)
Increasingly, you are your own form of identification. Your face or fingerprint is all you need to access your smartphone, for example. This technology will spread to retail and banking transactions.
Here’s one way it’s becoming reality: In September 2020, Amazon introduced Amazon One at select Amazon Go store locations, allowing customers to tie their phone number and credit card information to the palm of their hand.
The system is contactless — you simply hover your hand over a sensor.
Perhaps you’ll no longer need to reach for your analog or even digital wallet to buy something. Instead, point-of-sale systems and public transit turnstiles will identify you and your method of payment as you glance at a red dot or wave your hand.
If that sounds a bit creepy to you, others ly feel the same way. It will take time for consumers to warm up to the idea of virtual credit cards metaphorically embedded in their bodies.
“Not everyone wants a retinal scan done on them every time they make a banking transaction,” says Richard Goldman, CEO of Competiscan, a company that tracks and analyzes direct marketing activity. “That might be too ‘Minority Report’-ish,” referring to the popular sci-fi story and film that imagines similar technology.
2. Travel cards will return to their rewards roots — with a twist
With travel off the table for many last year, travel rewards credit cards quickly overhauled the list of ways you could redeem points and miles. Suddenly, you could use rewards to cover the cost of groceries, restaurant takeout and streaming service subscriptions, or apply statement credits toward the cost of home workout apps and programs.
But in the latter half of 2021, it's possible we may feel more comfortable venturing out again thanks to promising vaccine news, so expect some of these temporary perks to slowly disappear. Travel credit cards will ly return to their original purpose, with attractive sign-up bonuses to win over Americans who are ready to book a vacation.
But travel cards won’t just aim to get you on a plane or in a hotel at a reduced price. Goldman predicts we’ll see cards amplify high-end experience offers, cooking or restaurant experiences, that you can book using points and miles. Combining exclusive experiences with travel will be a way to make a long-awaited vacation that much more special.
3. This will be the dawning of the age of the 'alternative' card
For consumers who are new to credit, or who are rebuilding their credit, credit card options have historically been pretty limited. Secured cards have been the traditional choice, but many of them charge annual fees on top of an initial cash deposit, and with a few exceptions — the Discover it® Secured Credit Card — these cards don’t offer rewards.
But alternative cards, which can use nontraditional underwriting methods when reviewing applications, are becoming an increasingly attractive option for many.
No hard credit pull required
Some fintech (financial technology) companies have announced credit cards, Tomo and the X1 Card, that don’t require a hard credit pull as part of the application process. Instead, they can focus more on other financial information — your income and bank account balances — when weighing applications.
New ways to extend credit
We’ll see more products that look credit cards, but don’t act them, which will provide new ways to extend lines of credit to consumers. We’ve already seen this with the Upgrade Card, a credit card/personal loan hybrid product that launched in October 2019.
4. Premium cards will entice you to sign up and stick around
In 2020, it was hard to justify a three-digit annual fee for a travel rewards card when you spent most of the year commuting between your bed and your desk.
But, fingers crossed, travel will come back, and with that will come sizable sign-up bonuses.
When you combine a valuable bonus with other popular travel perks airport lounge access, free checked bags and statement credits for TSA Precheck and Global Entry, it’s possible to offset the cost of an annual fee.
You may not have to do much searching for such offers on your own, either. “Major issuers will upsell and cross-sell, try and move you to a new card,” Goldman says.
Typically, switching (aka “product-changing”) your existing card to a higher-end version means dodging a hard pull on your credit, since it usually doesn't require submitting a brand-new application. But traditionally it's also meant going without the sign-up bonus, since, again, you're not opening a brand-new account.
But in 2021, look out for generous upgrade bonuses from issuers that want to keep your relationship going for the long term. By offering you an incentive to stay, you’re less ly to consider a premium card issued by a different credit card company.
5. Customer experience will be in the spotlight
In 2019 and 2020, we saw the launch of tech company-branded cards the Apple Card and the Venmo Credit Card, which both tout app-based card management, instant access to a virtual card upon approval and other unique features.
Even traditional credit card companies are imagining ways they can update their user experience so cardholders can understand and harness the full value of their cards. Any product that doesn’t offer a seamless online and mobile experience, plus easy reward redemptions, will be left in the dust.
“If you haven’t completely thought through your onboarding and customer experience, you’re going to lose,” Goldman says. “In 2021, it has to be perfect. Someone’s out there doing it better than you are.”
Top 6 Credit Card Tips For 2021
Editorial Note: Forbes may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.
Should 2020 be forgotten and never brought to mind? Definitely. With what has to be a better year just around the corner, Forbes Advisor has put together some handy tips to help you start 2021 off with the best credit profile possible.
1. Don’t Leave Free Money on The Table
Many cards, most notably higher-tier American Express cards, have credits that reset every calendar year. Failing to use up your credits each year can cost you thousands of dollars over the long run.
Fortunately, we’ve made a handy list of the cards you need to check.
While it’s too late to use credits for 2020, you can start using the credits for 2021 right away so you won’t be scrambling at the end of the year.
While we’re on the subject of free money, make sure you are optimizing your offers. Most major issuers are now sending targeted offers that reward you for purchases you already make. The trick is that you have to register for them. Make a monthly reminder in your calendar now to review your cards and enroll in any offers that you might be able to use.
2. Make 2021 The Year of The Retention Offer
Since your calendar is already open with a reminder to check your cards for offers, make a note now of your card renewal dates and set a reminder to call 30 days in advance to ask for a retention bonus.
A five minute phone call could net you hundreds of dollars worth of rewards as banks pull out the stops to keep your business.
And this way if you don’t get what you want, you can evaluate whether you want to pay the annual fee to keep the card before you get hit with the charge.
3. Make Sure Your Credit Cards Still Fit
Overindulgence at the holidays can leave more than just your waistband strained.
Now is a great time to evaluate your current credit cards and see if what you have matched up with your spending patterns over the past year.
With the pandemic putting the kibosh on most types of travel, you may find that your 2021 plans also include less spending on the go and more spending on staying home.
If that’s the case you’re ly to spend more on things supermarket purchases and gas and less on expenses airfare and dining out.
Trading a pricey airline or dining rewards card for one offering high rewards on groceries and gas may make sense. Take a look at what you’re paying in annual fees and see if you’re truly getting that amount or greater back in value.
If not, it’s time to consider making a change to a new card that’s a better fit for how you spend.
4. Ditch Debt
If you’re carrying debt, especially on a high-interest credit card, the New Year can offer a fresh start. A balance transfer card can be a powerful tool to help you pay down what you owe without accruing additional finance charges.
If possible, the ideal goal with a balance transfer card is to pay off the entire balance within the promotional 0% APR period. You can figure out how much your monthly payments would have to be to achieve that goal by dividing what you owe, plus any balance transfer fees, by the number of interest-free months on the card.
For example, if you owe $10,000 and you plan to transfer it to a card with a 15-month 0% APR balance transfer offer that carries a 3% balance transfer fee, your new balance will be $10,300. To pay off the debt completely, you’d have to pay $686.67 each month for 15 months.
5. Commit to a Cash-Back Portal
The only thing better than getting cash back on your credit card spending is getting even more cash back. You can easily do this via shopping online through a cash back portal with your rewards card.
Websites Rakuten.com or BeFrugal.com will give you cash back just for shopping the way you normally would.
By stacking this payout with what you’d get from your credit card, you can amp up the savings on most of your online spending.
6. Start an Event Stash
In 2021 we’re ly to see an explosion of invitations celebrating various big events that were postponed. And although it’s a wonderful thing to finally be able to celebrate your friends and families on their special days, the price to party can really add up.
Start saving up your credit card earnings to help pay down the cost of gifts, festive attire or any travel accommodations required to be a part of someone’s special occasion.
3 Credit Card Goals to Set in 2021
Image source: Getty Images.
While it doesn't influence our opinions of products, we do receive compensation from partners whose offers appear here. We're on your side, always. See our full advertiser disclosure here.
The value you get from credit cards depends quite a bit on how you use them. If you spend responsibly and pay in full, credit card rewards can make you money. Overspending, on the other hand, could put you in debt and cost you.
To ensure you come out ahead, it helps to set goals. Good credit card goals give you targets to aim for and encourage smart financial habits. Here are three simple and effective credit card goals that will keep you on track through 2021.
1. No credit card debt
If there's one way consumers get in trouble with credit cards, it's credit card debt. The average credit card balance in 2020 reached almost $6,000. On a card with an average APR of about 16.5%, you're looking at nearly $1,000 per year in interest.
Considering the cost of interest, paying off credit card debt can be a huge money saver. Here are a few tips that can help:
- Calculate how much you need to pay per month to get your balances down to $0 by the end of the year.
- Review your budget and cut back on nonessential expenses so you can make bigger monthly debt payments.
- Look at balance transfer credit cards with a 0% intro APR. This type of credit card lets you refinance your credit card debt at zero interest for the length of the promotional period.
Even if you don't currently have any credit card debt, you can still set this goal. Instead of paying off debt, focus on paying your credit card bill in full every month to avoid debt.
2. Earn $500 in rewards
Credit card rewards are a fantastic way to get money back on your everyday spending. If you're new to rewards credit cards, the two most popular options are cash back cards and travel cards. Both can work well, so it's just a matter of whether you prefer cash back or points you can redeem for travel.
Now, $500 in rewards may seem a lofty goal, but there are several ways to hit that mark:
- Pick up one of the credit cards with the best sign-up bonuses. Some of the biggest bonuses offer $500 or more to new cardholders who meet the spending minimum.
- Open a credit card that earns 2% back on every purchase. A little under $2,100 in monthly credit card spending would earn $500 back per year.
- Get a credit card with bonus rewards in areas where you have high spending. For example, you could get a card that earns 4% back on groceries and dining if those are two big expense categories for you. About $1,050 of monthly spending in those areas would get you $500 back.
3. Go up one credit score range
Your credit score is an important part of your financial profile. The higher it is, the more ly you are to get approved for the best credit cards and low-interest loans.
It takes time to boost your credit score. That's why a realistic goal is important. Going up by one credit score range is achievable within a year. Here are the credit score ranges using the FICO® Score system, which is the most widely used:
- Very poor: 300-579
- Fair: 580-669
- Good: 670-739
- Very good: 740-799
- Exceptional: 800-850
There are only a couple of things you need to do to improve your credit. Most important is paying all your bills on time. You also shouldn't use too much of your credit. Ideally, your balances should never exceed 20% of your total credit lines. This will keep your credit utilization ratio down.
If your credit score is already very good or exceptional, you ly don't need to improve your credit much, if at all. In that case, your goal can be to maintain your credit.
You don't need a long checklist of credit card goals for the year. With just these three, you'll save money on interest, make money from credit card rewards, and end the year with a better credit score.
“,”author”:”Lyle Daly (LyleDaly)”,”date_published”:”2020-12-01T16:00:00.000Z”,”lead_image_url”:”https://g.foolcdn.com/editorial/images/602860/19_07_30_a_woman_with_a_cell_phone_and_credit_coriginal.jpg”,”dek”:”Looking for ways to make better use of your credit cards in 2021? These three goals will do the trick.
10 financial resolutions for 2021 – that are actually doable
How many times have you made a number of New Year’s resolutions – only to forget about them long before spring?
The trick to making New Year’s resolutions is to choose those that are actually doable. And a good place to start is with your finances.
To explore feasible financial moves that are easy to stick to, we got advice from Bankrate Chief Financial Analyst Greg McBride, CFA.
Use these tips to set yourself up for financial success in 2021.
10 financial resolutions for 2021
Before you dive into your finances, make sure you know what you hope to accomplish this year. According to Women & Financial Wellness: Beyond the Bottom Line from Merrill Lynch, “Seventy-seven percent of women say they see money in terms of what it can do for their families.” By figuring out what is most important to you, you can create specific priorities and goals.
Do you hope to pay off your credit cards or are you saving for a down payment on a house? Or do you see yourself purchasing a new car this year? Map out your goals so it’s easier to see why you need to create a budget.
2. Create or freshen up your budget
You’ve heard that you need to create a budget a million times. Why? Because it’s one of the healthiest financial moves you’ll ever make.
Particularly after 2020, when many faced unemployment, 2021 is a good time to figure out where your money is going by tracking your spending against a budget.
“Make a monthly budget for 2021 and resolve to track your spending against it throughout the year,” McBride said. “Any month you spend less than budgeted, transfer the difference into savings.”
As daunting as it may seem, a budget will provide long-term benefits, both financial and mental.
Schedule a “money meeting” with yourself every month and examine your spending, make tweaks and congratulate yourself for the work you’ve done.
Budgeting apps such as Mint, Goodbudget and You Need a Budget (YNAB) are all good options. But whichever tool you pick, make sure to:
- Give your money a purpose by bucketing it into specific funds or accounts.
- Be patient as you settle into a budgeting routine.
- Schedule a “money meeting” with yourself every month and examine your spending, make tweaks and congratulate yourself for the work you’ve done.
See related: How to create a budget that works for you
3. Check your progress on paying down debt
McBride congratulates those who have made steady progress in paying down their debt and recommends making a plan to pay it down in 2021 (if you’ve stalled a bit in 2020).
You can temporarily cut your expenses and throw that money toward your debt, or, if you have high-interest debt, consider debt consolidation, McBride said.
A nonprofit credit counseling agency can set you up with a debt management plan that will even ly lower your interest rate.
In addition, you might want to pick up a side hustle and use that money to pay down your debt.
The average credit card interest rate is still around 16%, and that’s still a high rate, particularly if you carry a balance.
“Credit card debt is the most expensive debt most households have, so put some urgency behind the efforts to get these balances paid off,” McBride said. “Paying down a 16% credit card balance is a risk-free return of 16% – at a time when savings accounts and government bonds pay less than 1%.”
There are many strategies you can use to pay off your credit card debt, but a good guideline is to first pay off the debt with the highest interest rate.
See related: How to pay off credit card debt – 3 best strategies
4. Review your credit card benefits and reward offers
Credit card issuers have responded toward consumer spending changes as a result of the pandemic by adding new benefits and rewards bonuses to their credit card products.
Don’t miss out on those perks, such as extra cash back on groceries and food deliveries, streaming services and more.
See related: Best cash back credit cards
5. Review your asset allocation and rebalance your portfolio
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The stock market has been particularly volatile in 2020 so you should review your mix of investments in 2021.
“Taking the opportunity to rebalance back to your intended mix of stocks, bonds, cash and alternative investments means lightening up on things that have done well while adding to asset classes that have lagged,” McBride said. “This also enforces the discipline of ‘buying low’ and ‘selling high.’”
“Travelers have been largely sidelined in 2020, but credit card rewards have very much been on the move,” McBride said. “Check your cards and make sure you’re aware of category spending payouts that have changed and are using the right card for those expenditures.”
See related: Investing tips for women: Overcoming financial setbacks for future success
6. Consider converting your traditional IRA to a Roth
If you lost income in 2020, McBride suggested maybe taking advantage of your lower tax bracket to convert some of your traditional IRA into a Roth IRA.
“Be advised that converting will trigger taxes on any contributions not already taxed, so be sure to consult your tax adviser,” McBride cautioned.
If you earn too much to contribute to a Roth IRA, consider a “back-door” Roth conversion.
“If you’re unable to contribute to a Roth IRA directly because of your income, you may benefit from contributing to a traditional IRA, then converting the funds to a Roth IRA,” McBride says.
“If you have an existing traditional IRA, be sure to consult your tax adviser about the tax implications before converting anything,” he added.
7. Review your beneficiaries
Many people designate beneficiaries and forget about it but it’s important that your assets go to whom you want, so review yours for 2021. McBride said to keep in mind that beneficiaries trump wills, so make sure the two documents are aligned in their directives.
“If you haven’t looked at it in a while or especially if there has been a change in family dynamics such as a marriage or divorce, review the beneficiary designation on your life insurance and retirement accounts to make sure it reflects your current intentions,” McBride said.
8. Review your savings
Having savings is important in the event of an emergency. If you had to exhaust your savings during 2020, you’re not alone. But in 2021, make a plan to replenish and grow your savings account.
“Add up the amount you’ve contributed to your retirement accounts, 529 college savings plans, savings accounts and other investment accounts and subtract out any withdrawals taken during the year.” McBride said.
If you had to exhaust your savings during 2020, you’re not alone. But in 2021, make a plan to replenish and grow your savings account.
“Set goals for 2021 and put the plan into action by increasing your workplace 401(k) plan contributions, setting up a direct deposit from your paycheck into a dedicated savings account, and arranging for automatic transfers into an IRA and/or 529 college savings account,” he added.
See related: How much emergency fund should I have?
9. Check your credit report
You should check your credit report routinely to see if there are any mistakes on it that happen to be affecting your credit score – or, worst-case scenario, to see if you’ve been the victim of identity theft.
“Regularly checking your credit report is a great way to spot errors or evidence of identity theft,” McBride said. “Knowing what is on your credit report and that everything is correct is important when going to apply for a loan, rent an apartment or even changing insurance carriers.”
AnnualCreditReport.com provides consumers with a free credit report annually, so make sure you take advantage of that in 2021 so you can catch (and fix) any errors early.
See related: Credit cards that offer free credit scores
10. Continue to educate yourself
Learn the ins and outs of your own financial picture – even as it relates to the fine print. Find places where you can make tweaks or by gaining a better understanding of your taxable income, your investments, your insurance products, etc.
Some great financial literature to get you started includes “Clever Girl Finance: Ditch debt, save money and build real wealth” by Bola Sokunbi, the founder of Clever Girl Finance and a Certified Financial Education Instructor (CFEI). The book is an accessible personal finance book written specifically for women.
Another piece of literature worth looking into is “Live Richer Challenge: Learn how to budget, save, get debt, improve your credit and invest in 36 days” (which comes with accompanying resources) by Tiffany Aliche, better known as The Budgetnista. An award-winning teacher of financial education, Aliche has been featured on “Queer Eye” and, through her company, has created a financial movement that has helped over 800,000 women worldwide collectively save more than $100 million.
Free resources are also available to you as you make your way through your personal finance journey. The American Association of University Women (AAUW) offers tools and resources to help women bridge issues the wage gap.
As you make your way through 2021, don’t put too much pressure on yourself when it comes to your finances. Use the tools available to you and make a plan that you can easily follow. By adding personal finances to your 2021 resolutions, you’re setting yourself up for success!
The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.