Around year-end or the beginning of a new year, it’s customary to set goals for the coming year—professionally, personally, financially, spiritually, emotionally, and so on. In our household, we set personal financial goals every year. There’s a method to the madness, but this article will focus on the goals and why we set them rather than the process we use to develop the goals. If you’d like to learn about a recommended process for goal setting, please read more here: https://sowadime.com/2020/09/17/financial-goal-setting/.
Before we move on, notice I called these “goals” rather than “resolutions”. In my opinion, when the average person commits to a resolution, it is generally unreasonable, unachievable, and/or unsustainable. I recognize not all resolutions work that way but think about the last time you set a New Year’s resolution. Did you achieve it by New Year’s Eve of the following year? Or did you fall off the wagon in February? On the other hand, goals should be reasonable, achievable (even if it’s a stretch goal), and sustainable. These goals are typically not life-altering but rather slight adjustments to behaviors or habits in the short-term that will yield significant long-term benefits.
Now, here are the Sow a Dime & Reap a Dollar 2021 household financial goals:
- Boost emergency savings 25%. Every few years, we strive to increase our emergency savings. In most cases, it has nothing to do with our cost of living/lifestyle increasing; as you know from reading articles on this site, we keep that as consistent as possible. Rather, it has more to do with hedging our bets, and 2021 will be no different. We intend to increase our emergency savings simply because the future is uncertain; in fact, lately, it feels like that uncertainty grows daily. It helps us sleep at night knowing we have a reasonable emergency fund to fall back on should major, unexpected life events come to be. We know this emergency savings couldn’t possibly cover every possible outcome or life event, but it will go a long way to covering most precarious financial scenarios.
- Double Mrs. Sow a Dime’s retirement contributions. Like boosting the emergency savings, periodically we up the ante and increase the contribution rate to our retirement plan(s). 2021 will be the year for Mrs. Sow a Dime to do just that. This one is a good way to keep our lifestyle in balance as well. As we earn raises at our respective places of employment, we typically force that incremental income into a savings account in some form. Preventing lifestyle creep can be tough, and this is one method we use to make sure we keep our cost of living consistent.
- Increase contributions to 529 plans by 20%. As I covered in the article “Financial Planning for Children” (https://sowadime.com/2020/12/22/financial-planning-for-children/), we were intentional about opening and consistently funding 529 plans for both our boys. These plans are a great way to save a little at a time for significant future education expenses. One of our long-term goals as a family is for our boys not to have to worry about paying for their own college expenses, so we choose to prioritize saving each month into these accounts to make that happen. Mrs. Sow a Dime and I understand the impact of exiting college with and without student loan debt, and having none is a major financial tailwind as a young adult.
- Increase charitable giving to our church by 33%. If you’re a consistent reader of the site, you’ll know I’m not shy when it comes to writing about charitable giving (see articles here: https://sowadime.com/2020/11/02/supercharge-your-giving/ and here: https://sowadime.com/2020/08/10/three-budget-overages-i-never-question/). Quite simply, it is one of our most important budget items and one we believe we’ve been called to act on. Each year, we challenge ourselves to up our giving to our church as well as other not-for-profit entities we support. Having two boys under the age of five means extra time is in short supply, so we choose to give financially since we’re rarely able to carve out time to participate in events in person.
So there you have it! These are the four goals we will focus intently on throughout 2021. We may pick up another short-term goal or two as we go through the year, but these will function as the framework within which to make financial decisions in the next 11 months. The good news is these are mostly “set it and forget it” type of goals. It’s just a matter of changing a contribution rate or amount and putting it on autopilot.
What are YOUR financial goals for 2021?