Financial Moves To Make in 2021

Financial moves to make in 2021

With a new year comes a fresh start! Consider making the following positive financial moves in 2021. 


Creating a budget can help you spend less and save more. Although budgets may vary from person to person, the 50/30/20 rule is an excellent place to start. 

The 50/30/20 rule is a budget structure to help you allocate your take-home income, which is the part of your paycheck after your taxes are taken out. 

The “50” refers to the 50% of your check that should be allocated to necessities. These necessities include housing, groceries, transportation, utilities, health insurance and minimum loan payments. 

The “30” is the 30% of your income that can go to your wants. Your wants refer to non-essential expenses like entertainment, dining out, hobbies and monthly subscriptions.

The “20” is the 20% of your income that you should set aside for savings. This part of your budget may depend on what you need to save for, but it’s important to have an emergency fund to pay off high-risk debt or to contribute to a retirement fund. 

Build an emergency fund

Speaking of emergency funds, starting or growing your emergency savings is a great goal to set for 2021. It is recommended that you have three to six months of living expenses saved in case of unemployment. Emergency funds can also be used for unforeseen medical expenses, home repairs, and major car fixes. 

Open a high-interest, easily-accessible savings account for your emergency funds. A Southland Money Market account would be great for this. 

If an emergency happens before you’re able to save and you get in a pinch, consider a Home Equity Line of Credit (HELOC). A HELOC is a low-cost loan solution that borrows from the equity in your home.

Pay off your debt

Paying off your debt is a great financial goal no matter what time of year it is, but why not aim to make it your New Year’s resolution? 

While there are many debt pay-off strategies, you can save the most money by paying off your most expensive debt first. Paying off your high-interest loans first will prevent you from accumulating even more interest. 

Next, make a habit of paying more than the minimum payment on your loans. Although you may have to tap in to your “wants” in the 50/30/20 budget rule, paying down debt will allow you to free up more funds for your wants later. 

It is also a good time to look into credit card balance transfer options. Although you may have to pay a balance transfer fee, a lower interest rate will save money over time. 

Boost your credit score

If you are working toward paying off your debt in a timely and responsible manner, your credit score will naturally increase. You can also boost your credit score by making sure your bills are paid on time. 

In addition, make sure you are only applying for and opening new credit accounts as needed this prevents you from having too many hard inquiries on your credit report. Unnecessary cards in your wallet can also tempt you to overspend and accumulate debt on your various accounts. 

Keeping your unused credit cards open is a smart strategy as long as they aren’t costing you in annual fees. Closing an account may increase your credit utilization ratio, which may lower your credit score.  

Open a retirement account

It’s always a good time to start saving for retirement. 

Although saving for an emergency fund and paying off debt both come first, building your retirement fund is important to ensure you will be financially secure later in life. 

Invest in a 401(k) or IRA account to save for retirement with tax-free growth or on a tax-deferred basis. A general rule of thumb is to invest 15% of your pre-tax income on your retirement.

Sources: Nerd wallet, Experian, and The Balance.