Money Goals for 2021: Saving, Investing

Money Goals for 2021: Saving, Investing

Yes, it’s that time of the year when we are thinking about what we achieved in the past 12 months and we’re thinking about the future. For many people, this is the time of the year when they make the biggest promises. Money goals for 2021, quitting smoking, paying off debt, investing, etc. Most of that wouldn’t happen for most people.

How many times did you promise yourself or a loved one that you would quit smoking? Did you actually do it? If no, what was the reason – you were not motivated enough or you didn’t actually felt like really quitting smoking?

Either of those reasons is fine. Since we’re humans, it’s in our nature to promise stuff and then avoid actually doing what we promised.

Change doesn’t require a date

You’ve heard me. If you want to quit smoking or have better money goals for 2021, you shouldn’t wait for New Year’s Eve or another special occasion to do so. Change can happen overnight and it depends on us. It’s on us to decide that we’re done with drowning in debt and paying it off.

You probably feel good that you’re making both ends meet and paying off your debt. But have you thought about paying off your debt sooner? What if you double the amount of your monthly payments and pay off your debt in 2021? Isn’t that a nice money goal for you?

You can definitely do that from tomorrow, you don’t need to wait for a specific date. My partner quit smoking with a snap of her fingers. She thought about the reason she is smoking, realized that it’s just a habit, and quit. She’s been smoking for more than 10 years.

I decided that I want to pay myself first, right after payday. It was an overnight decision, I didn’t wait for a special date, occasion, or whatsoever. And you know what? This year I saved 46% of my income on average.

Savings and investments as of December 2020. Current investment portfolio is worth €1100, average monthly YTD savings is 46% of my income.

Money goals for 2021: Emergency fund, paying off debt

Okay, so here are few starting points for all of you that wonder what exactly to set as a money goal for 2021. If you are starting from scratch with your financial independence, you would need to firstly establish a nice emergency fund. After this is done, you have 2 steps in front of you: paying off your debt and then investing.

There are lots of ways to pay off your debt fast. People are still arguing which is the most effective one and since I think this depends on the situation, I’ll leave the decision to you. You can start by paying off your high-interest debt first. This way you’ll limit future interest quicker.

The other way around is to start with your largest one. Pay it first, then the 2nd largest, then the 3rd largest, etc, until you pay them all off. In Europe, it is rare for people to have more than a couple but still depends on their personal situation. 

Money goals 2021: Saving and investing

If you managed to get rid of your debt and ramped up your emergency fund for 6-12 months, then you’re good to go with saving and investing. If you think about saving money as your primary goal for the future, first think about what are you going to save your money for.

Remember that stockpiling money in your bank account isn’t going to be effective in the long term. The inflation, bank taxes, and other stuff will eat your money like rats. If you think about holding some amount in cash, at least consider putting them in a high interest deposit account.

Investing is a logical step for me. Learn the basics, go through courses, or just hire a financial advisor that would help you to manage your investments or do it for you. If you think of investing by yourself, I would recommend reading The Strategic Dividend Investor and The Intelligent Investor. Both will give you a good sense of what the stock market is and how it works.

My personal money goals for 2021

For the past year I’ve been living debt free and with a nice 10 month emergency fund. I’ve also secured a travel and sinking funds, just for the sake of being prepared for next year. I’ll continue to stockpile cash as I want to become PMP certified in 2021. This will help me to get 1 step further in my career and the certificate and education would cost me about €1500.

In terms of investments, I reached €1100 invested as of today. My portfolio grows and it will continue to grow with the same steady amount for the future. I am hoping that till the middle of 2021 I’ll get a pay raise, as it’s due with my new job role I took in February 2020. 

With the pay raise, the goal is to continue saving the same amount of money for education, a new car (as this is also due) and our home renovation. As an investment goal, I hope I would reach €2500 invested till the end of 2021.

What are your money goals for 2021? Let me know in the comments down below!

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