Planning for Your Financial Freedom

The guide to achieving your financial resolutions in 2021

Calendar, Money, Tax Papers, Couple in sunset

Happy New Year! I know you’re as pleased as I am to put 2020 to rest. But with the new year—drumroll please—it’s time to make our Resolutions for 2021!

Yes, it’s true, resolutions are made to be broken. And I’m just like the 94% of people who don’t keep theirs (according to Every year, I make the same ones—lose 10 pounds and save and invest more money. Although, I have to say, I have stuck (mostly) to my exercise program (didn’t lose any weight!) and I did make some progress on the saving and investing angle.

How did you do?

The Top 10 New Year’s Resolutions
According to, here are the Top 10 New Year’s Resolutions:

  1. Exercise more
  2. Lose weight
  3. Get organized
  4. Learn a new skill or hobby
  5. Live life to the fullest
  6. Save more money / spend less money
  7. Quit smoking
  8. Spend more time with family and friends
  9. Travel more
  10. Read more

Those resolutions vary greatly by state.

As you can see in the following map, reports that therapy is the most popular resolution in 12 states (including my state of Tennessee). I guess that makes sense, with the increase in the focus on mental health during this COVID-19 crisis. Eight states cite weight loss as their number one goal. Seven wish to quarantine and chill. Four just want a good night’s sleep. And only Iowa, Mississippi and North Dakota want to save money!

Popular New Years Resolutions by State


Why our Resolutions Fail
So, why do only 8% of our population keep their New Year’s Resolutions? It turns out that the answers are the same as for those who fail in their financial goals—or really any other ‘wish list.’

According to, they are:

Your resolution isn’t specific enough. You see, just saying you will “lose weight,” “save more,” or “learn a new skill or hobby” sets you up for failure, as you have not set up a system to mark your progress. As a business owner, if I say to myself, “I want to hire some good Realtors this year,” it probably won’t happen. But if I say, “I want to hire 5 new agents who each produce at least $2 million in annual sales,” I can make that happen, by outlining a plan to find and hire those agents, and then train them to succeed. Without planning, creating and following the steps needed to attain that goal, and acknowledging my small wins along the way, I probably won’t stay motivated and I won’t reach my goal.

Solution: Make your goal specific and achievable: I’m going to exercise 30 minutes, three times a week. I will go to Starbucks twice a week instead of every day and I will save and invest that $100 extra per month. I will sign up for a virtual French class in January.

You are not looking at your goals positively. We may want to “stop eating junk food” or “wasting money,” but those words are negative, and they dwell on what you’re trying to stop, which often makes them more attractive. Just thinking about junk food makes me want to find the chips!

Solution: Focus on the positive things that will come to you when you stop those behaviors, such as weight loss, feeling healthier, and saving more money.

Your resolution isn’t about you. Sometimes, our New Year’s resolutions are not what we really want. Oftentimes, we are influenced by what our husbands, mothers, and friends want us to do—like lose weight, dress better, or stop watching so much television.

Solution: You must want and set your own goals if you are to be successful, otherwise, you will fail. If you love to watch five hours of TV every day, and your wife wants you to reduce that viewing time, it probably won’t work. But if you decide three of those hours could be used for something more productive—that you like to do—you are more likely to buy into the plan and be successful.

The point is, you can make and achieve your resolutions—you just have to go about it the right way. I’m going to give you some great tips on just how to do that—as well as the tools you’ll need to steer your course.

New Year, New Beginning
But first, let’s talk about new beginnings.

2020 dealt a devastating financial blow to many of us. The unemployment rate peaked in April, at 14.7%. As of December 13, there have been 610 corporate bankruptcies in America.

But one bright spot that COVID brought us is this: people in the U.S. are saving more now than they have in decades. Also, in April, our national savings rate peaked at 33.7%, according to It has since dropped to 12.9% in November, but that is the highest savings rate in more than 60 years, and well above our average, which has generally hovered in the 7% range.

National Savings Peak in 2020

Now, we’ve arrived at 2021. The year ahead shines brightly, as a beacon of hope—hope that we will toll the death knells on the coronavirus, boost employment, and nurse our travel, restaurant, retail, and small businesses back to health.

After the financial interruption of the coronavirus, saving and investing more should be right at the top of everyone’s New Year’s resolutions. Think of it this way—cash gives you a lot of flexibility. It can make your life a whole lot easier if you suddenly find yourself without a job or with a medical emergency. Saving/investing can buy you some really nice vacations, pay for your children’s or grandchildren’s education, purchase your dream house, or help you start a business. And most of all, it will provide you greater mental health, as you will have a cash cushion that stops the worrying that comes with financial instability.

So, number 1, define your savings/investing goal, and as my dad used to say, “pay yourself first.” That means—even if you don’t think you can afford it—save something, and then build on that. Here are some ways to make your savings grow.

5 Easy Steps to Creating a Budget
Create a budget. There are five steps to developing a budget.

  1. Calculate your net income. Most of us know how much money is coming in. Of course, if you are self-employed, or commission-based, that varies month-to-month. So, you can start with what your minimum monthly intake will be.
  2. List monthly expenses. What are you buying? The best way to figure this out is to keep a record of all your expenses for a minimum of one month. You’ll be surprised and amazed at where your money is going. Write it all down: $5 at Starbucks, $10 at the grocery store for impulse buys (that’s why you need to make a grocery list before you go shopping!), $17.99 for Netflix, $80 for your hair cut and style, $40 for that scarf you didn’t need, utilities, auto and health insurance, gas, auto repair, HVAC tune-up, childcare, gym memberships, dining out, entertainment, and loan and mortgage payments—yes, write it all down—no matter how small!
  3. Label which expenses are fixed, and which are variable. Fixed expenses are just like they sound; you have to pay them. These are bills like rent/mortgage, utilities, transportation, insurance, food, and repaying loans. Variable expenses are items that you may not need, like your daily Starbucks run, eating out three times a week (like we used to, pre-COVID!), or the gym membership that you don’t use, or those regular shopping sprees to make you feel better. In other words, these are the expenses that you have the opportunity to reduce or eliminate completely which can be the source of your new savings/investing initiative.
  4. Determine average monthly costs for each expense. Your fixed expenses should be about the same each month, but things like groceries and utilities may vary. So, if you have the patience, look at your checking account and see how much you’ve spent on these items in the last year, and average them out. Then put that number into your budget. Some months you’ll be ahead and some you won’t.
  5. Make adjustments and start saving. If you’re outspending your net income, you’ll need to find some expenses that you can reduce or cut completely. And this is also where you will allocate your monthly savings. If you are spending less than you make, drop the overage into savings. You can set up one or more savings vehicles—for vacations, education, and retirement. But first…

Making Saving and Investing a Priority
Create an emergency fund. According to a November survey from, three in five Americans (61%) say their emergency savings won’t last through the end of the year or that they have already run out of savings. Historically, experts have advised that you have three to six months’ worth of living expenses in your rainy-day fund. COVID-19 has shown us that our emergency funds should probably cover at least one year’s expenses.

Automate your savings contributions. If your paycheck goes automatically into your checking account, ask your employer to divide it, so that some of your income is allocated to your savings account. And every time you get a raise, add at least a portion of that to your savings. If you are self-employed, sign up for an automatic monthly debit from your checking to your savings/investing accounts. If you do that, your money will grow exponentially. The sooner, the better, as when it comes to savings, time is your friend, as you can see from the following chart.

The Power of Compounding


If you’d like to play around with different savings and interest/investment rates, try this calculator:

Boost your retirement savings. This is the most important part of your financial plan. Depending on Social Security is not a great (or livable) goal. The average Social Security benefit is $1,503 per month. That will barely cover rent or mortgage expenses for most people.

If you have a 401(k), maximize your contribution—especially if your employer matches some or all of your contributions. Do that now! Do not leave any “free” money on the table. In 2020, you can contribute up to $19,500 into a 401(k). And if you are 50 or older, that contribution goes up to $26,000.

Consider contributing to or maximizing your IRA. The maximum contribution for 2020 is $6,000, or $7,000, if you are over 50 years of age.

Invest more. Don’t just stop at retirement savings, although many of those are tax advantaged. After you’ve maxed out your retirement accounts, create another investment account at a brokerage house, in which you make regular deposits. There’s no limit to what you can save! Commissions are almost non-existent today, and these accounts can be as liquid as you desire. And if you are new to investing, start with mutual funds and ETFs.

Ways to Reduce your Spending
Ok, that takes care of the saving/investing portion of your New Year’s resolutions. Now, let’s talk about expense reduction resolutions.

Refinance your mortgage and/or your student loans. According to, the average 30-year mortgage rate is now 2.87%. If you plan to stay in your home for more than a couple of years, and your rate is at least 1% higher than that, you should definitely refinance. Let’s look at a couple of examples.

Mortgage balance: $200,000
Payment at 2.87%: $829
Payment at 4.50%: $1,013

Mortgage balance: $400,000
Payment at 2.87%: $1,659
Payment at 4.50%: $2,027

Just ask yourself, “What could I do with an extra $184-$368 (or more) per month?”

Pay down credit card debt. As I mentioned earlier, saving is on the rise in America, and credit card debt is dropping. As you can see in the following chart—this is the first decline in eight years!

Credit Card Debt Drops

And that’s a great thing! The average interest rate on credit cards is 17.98%, according to Imagine how much money you would have if you had zero credit card debt—and how much faster you could bring up your savings/investing accounts.

If you feel snowed under with credit card debt, there are two popular strategies to gain control of it:

  1. The debt avalanche method—paying off your highest debt first
  2. The snowball method—paying off your smallest amount of debt first

I know many financial advisors who advocate the first strategy, and that’s fine. But often, baby steps work best when getting your financial house in order. That’s because after each step, you’ll feel that you’ve accomplished something. And for that reason, #2 is my favorite strategy. Each time you pay off one of those lower balances, you’ll feel rewarded, and ready to tackle the next step.

Use the Island Approach to separate your credit charges. This means you will have different credit card accounts for different financial needs—a chain of islands, so to speak. For example, everyday purchases can be paid for with a rewards credit card that gives you airline miles, cash back, gift cards, etc. Alternatively, if you sometimes carry a balance, you will benefit from a 0% APR card. gives you a list of the best 0% cards (at least until 2022). The top five are:

  1. Citi Diamond Preferred (18 months interest-free on balance transfers)
  2. Citi Double Cash (18 months interest-free on balance transfers + double the cash back)
  3. Blue Cash Everyday from American Express (15 months interest-free on balance transfers)
  4. Bank of America Cash Rewards (12 months interest-free on balance transfers + rewards)
  5. Discover It Cash Back (14 months interest-free on balance transfers + 5% cash back)

Improve your credit score. Most credit scoring companies rank credit scores from 300-850. According to FICO, the average credit score in the U.S. is 695. If you want to apply for a mortgage, FHA considers the minimum score to be 580. Your credit score is critical when you need to borrow money. Generally, the higher your score, the lower your home mortgage (or consumer debt) interest rate will be. And that means a lower payment and more money in your pocket, instead of your bank’s.

Before you apply for any credit, it’s imperative that you find out your credit score. You can go to to get a free copy of your credit report and score. I recommend that you do this at least once a year—whether or not you’re seeking credit—just so you can check your report for any errors. (It won’t count against your credit score).

The good news is, if you don’t like what you see, it’s possible to increase your credit score.

Seven Key Strategies to Increase your Credit Score
Here are seven key strategies:

  1. Pay all bills on time and in full. Try to be right on the due date, but as long as you pay within 30 days of the due date, your credit score won’t take a hit.
  2. Lower your credit utilization ratio. That is how much you currently owe divided by your credit limit. Creditors don’t like lending to folks who are pressed right up against their utilization ratio.
  3. Take advantage of score-boosting programs. Many of the reporting bureaus have such programs, including and
  4. Don’t apply for new accounts too often. If a would-be creditor sees that you are being aggressive in obtaining new credit, that can be a red flag, and can lower your score.
  5. Use a secured credit card to build your credit. This card is backed by a cash deposit, and once you build your good credit history, you can apply for unsecured cards.
  6. Keep credit cards open; don’t cancel accounts you’ve paid off. The available credit will increase your credit utilization score.
  7. Use both installment (such as an automobile loan) and credit card accounts. By using both, you’re showing creditors you are responsible and that can lead to a higher score.

Cook more meals at home. I know, COVID-19 has sort of forced this on us. But not only is eating at home better for your pocketbook, it’s also healthier. According to the USDA, from 1978 to 2012, the share of daily calorie intake from food away from home (FAFH) rose from 17% to 34%. You can blame our addiction to fast food for most of that. And, honestly, most restaurant food has more butter, salt, and fattening ingredients than most home chefs use. And don’t forget the temptations, including all those fatty foods and desserts (which I rarely eat at home, but love to gobble up at a restaurant!).

If you don’t believe me, just look at this chart from

Food Calories Fat
McDonald’s Big Mac 563 33 grams
Medium-sized McDonald’s French fries 384 20
Medium-sized McDonald’s vanilla shake 733 21
Total for one meal 1,680 calories 74 grams
Burger King Whopper with cheese 790 48
Medium-sized Burger King French fries 387 20
Medium-sized Burger King vanilla shake 667 35
Total for one meal 1,844 calories 103 grams
Compare that to a meal prepared at home:
One-half of a roasted chicken breast 142 3 grams
Medium-sized baked white potato 130 0
Half a cup of green peas 67 0
8-ounce glass of 1% milk 102 3
1 cup of unsweetened applesauce 105 0
Total for one meal 546 5 grams


So, if you’ve cut down on eating out in 2020, stick with it in 2021. Your bank account and your waist will love you for it!

This may be something you’ve already begun to do with many restaurants around the U.S. being limited to takeout only. Keep it going into 2021.

Pare your expenditures. Once you see your budget in black and white (and all that stuff you are spending money on!), I have no doubt that you can eliminate a few categories. Be brutal—wouldn’t it be a lot more fun to see an extra $1,000 or two in your savings/investing account at the end of the year than those magazines you don’t read, those 40 pairs of black shoes, or 365 empty coffee cups?

If you’ve Cut Spending as much as Possible, Consider…
Look for ways to boost your income. In my November issue of Financial Freedom, I talked about different methods to increase your income, including second careers and side hustles.

Last year taught us some hard lessons, and one is that financial uncertainty can happen in the blink of an eye, and even when you think you have a steady income, that can quickly disappear. So, leaning on your entrepreneurial side can be beneficial—long and short term. You can do any number of side jobs—freelance work, dog walking, cleaning homes and/or offices, and even investing in rental properties.

Some Last Financial Resolutions
Review your insurance policies. Lots of things changed this past year, so make sure you have enough coverage—on your automobile, health, and property. And don’t forget to update your beneficiaries.

Update your will and medical directives. Family dynamics often change, so review these documents so that they are in line with your current relationships.

Check your withholdings. In 2019, the IRS created a new W-4 form to help you calculate your withholdings. You don’t want to let Uncle Sam use your money interest-free, so make sure you review your deductions.

Use Technology to Keep your Financial Life on Track
Fortunately, we no longer operate in an Ebenezer Scrooge environment, where bookkeepers toiled by kerosene lamps over their green ledger books!

Today, it’s pretty easy to let technology do most of the work. Sure, you can set up a spreadsheet in Google Sheets or Excel. That works just fine for a lot of people. But the downside of that is those spreadsheets don’t come with a lot of data tools to help you figure out exactly where you stand, financially.

However, there are plenty of technology solutions that will help you create and stick to a budget, tell you when an expense is getting out of line, and give you ideas on reallocating your income for maximum results. Most are pretty inexpensive, too.

Financial Software Programs and Apps cites the following websites as the best for personal financial planning:

  • Quicken: Best Overall;; app available
  • Mint: Best for Budgeting;; app available
  • YNAB: Best for Habit Building and paying off your debt;; app available
  • Mvelopes: Best for Zero-Based Budgeting;; an envelope budget program, similar to Dave Ramsey’s
  • TurboTax: Best for Taxes;
  • FutureAdvisor: Best for Investing;
  • Personal Capital: Best for Investment Advice and wealth management;
  • Tiller Money: Best for Spreadsheet Management;

I can recommend It works great for personal financial planning and execution, and you can interface it with your bank accounts. You just create the accounts and direct your income and expenses to the right one. Once you have those initially set up, most of your data will be automatically updated from your bank accounts.

I graduated about a decade ago to, which I use for business. I’ve used it for about 10 years, and it contains really good tools to decipher where your money is going to help you get control of your budget.

Most of these programs also offer apps for your phone (yes, there’s an app for that!). I’m still old-school and don’t do a lot with phone apps, but the younger generation prefers to do almost everything on their phones, and they have plenty of apps to choose from, including these from

For budgeting:

  1. PocketGuard, for a simplified budgeting snapshot
  2. Mint, for budgeting and credit monitoring
  3. YNAB and EveryDollar, for zero-based budgeting
  4. Goodbudget, for shared envelope-budgeting
  5. Honeydue, for budgeting with your partner
  6. Personal Capital, for tracking wealth and spending

For personal finance:

  1. Mint: Best Overall
  2. You Need a Budget: Best for Debt Payoff
  3. Personal Capital: Best for Wealth Management
  4. Clarity Money: Best for Managing Subscriptions
  5. Prism: Best for Bill Payment
  6. Spendee: Best for Shared Expenses
  7. Mobills: Best Visuals

We’ve discussed our 2021 Financial Resolutions: creating a budget, scrutinizing your expenses, boosting your income, and tracking all the above, so that you are 100% on top of your finances. But we still need to talk about how to make those resolutions come true. Don’t worry; it really isn’t that difficult. You just need to create some new habits.

I think these tips from on keeping your resolutions are excellent:

Start with specific micro-goals: Baby steps! Think of it as a marathon, not a sprint. Set small, measurable interim goals that will keep you driving toward your ultimate resolutions.

As I said earlier, set resolutions for goals that you—not anyone else—desire: That way, they will be far easier to keep.

Document your progress: It’s like making a list and checking it twice. Don’t you feel good when you can scratch something off your list? You will build confidence in your end goal by seeing—in black and white—your progress. Some folks find a journal is a great way to do this.

Practice patience and forgiveness: Just like with a weight loss program, you’re going to have “bad” days. So, forgive yourself and move on.

Schedule time to achieve goals: You schedule your business meetings, family birthdays, lunches with friends. Schedule your time to get on track with your resolutions, too!

Embrace the buddy system: Sometimes, it takes a village to achieve great things. And having a buddy to discuss your progress (and once in a while, to hold your feet to the fire!) can help you accomplish your goals.

Reward yourself for achievements: Big or small, cut yourself a break and build in a reward system for meeting your goals.

I feel sure that 2021 is going to be a much better year, and by taking these steps to create, monitor, and achieve your financial resolutions will result in our ultimate goal—Financial Freedom!


Leave a Reply

Your email address will not be published. Required fields are marked *

Enter Your Log In Credentials

This setting should only be used on your home or work computer.

Need Assistance?

Call Financial Freedom Federation Customer Service at
(800) 777-2658

Send this to a friend