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Seven Smart Financial Planning Tips for 2021

Eric Brown - Feb 25, 2021
There are a few tips and tricks that can help you get your 2021 finances off to the right start. Read on to discover some of the top financial planning tips you should be following this year.

When December 31, 2020, rolled around, many of us were more than happy to see it go. It was a hard year, and we’re all looking forward to starting a fresh new year off on the right foot. Part of that may be getting your financial life in order to create a better year for you and your family.

There are a few tips and tricks that can help you get your 2021 finances off to the right start. Read on to discover some of the top financial planning tips you should be following this year.

Refinance Your Mortgage

When you’re laying out your financial resolutions for 2021, one of the first should be to refinance your mortgage. In normal times, the decision to refinance should be based on how much you’re currently paying, how your payment would change, and whether you’re prepared to start over on your loan term. However, we are living in unprecedented times, and mortgage rates are showing it.

Thanks to the coronavirus pandemic, mortgage interest rates are at a historic low. Refinancing now means you can lock in that lower rate for the duration of your loan, saving you tens of thousands of dollars. If you’re paying mortgage insurance on your house, this can also be a great opportunity to refinance out of that.

Create a Spending Plan

None of us likes the word “budget” – it feels restrictive and makes us feel like we can’t spend the money we’ve worked so hard to earn. One great way to get the benefits of a budget without feeling like you’re on a leash is to flip the script. Instead of creating a limiting budget, create a spending plan that puts your money where you want it to go.

A spending plan starts with your net income and then shorts it into different spending “buckets”. You’ll need to start with a necessities bucket – mortgage, power bill, credit-card payment, etc. Then you can divide your discretionary income into the fun buckets – dining out, clothes, vacation savings, hobbies, and so on.

Automate Savings

Saving money can feel like an enormous challenge sometimes. You get your paycheque, you pay your bills, and it feels like you have so little money left to pay for the rest of the things you need that month. One great way to ensure you meet your savings goals is to make sure that money is tucked away before you can ever miss it.

Set up a system so that money you want to save gets automatically withdrawn from your account each month. Ideally, have this happen the same day you get your paycheque so you never realize the money was there, and so you never miss it. Your bank may be able to set up this automation for you; check with them if you’re unsure.

Boost Your Retirement Savings

One of your primary savings goals, no matter what your age, should be saving for retirement. Take 2021 as an opportunity to focus on boosting your retirement savings and setting money aside for your future.

Start by checking if your company has a matching policy for retirement savings. If so, and if you aren’t already, make sure you’re dedicating the maximum amount your company will match to your savings; otherwise, you’re leaving money on the table.

Most importantly, make sure you don’t give into the temptation to sell your retirement investments soon or pull from your retirement early. Retirement savings work best if you leave them in place through good times and bad.

Up Your Investments

You may be surprised to learn that 2021 is a great time to up your investments. An impact of the pandemic has been that the stock market has taken a hit. Stocks are on the low end right now, making this the perfect time to buy in. As we come out of the pandemic and the economy recovers, your investments now will pay off in a big way.

Update Your Beneficiaries

None of us have enjoyed being in lockdown, but it’s given us plenty of time to take care of tasks we’ve been putting off. We’ve cleaned out closets, reorganized paperwork, and learned how to bake sourdough bread. Make it a goal this year to update your beneficiaries in your will and other assets.

Once you’ve written and filed your will and set up life insurance policies, it can be easy to put them away and forget about them. But you may have had loved ones pass away, children come of age, or marriages begin or end. It’s worth taking some time to make sure your money will go where you need it after you’re gone.

Cook More at Home

Since the start of the pandemic, many of us haven’t been eating out at restaurants as often as we usually would. However, we’ve replaced those dining expenses with takeout food and tips with delivery fees. That money can add up and begin to seriously cut into those spending buckets we discussed earlier.

Make it a goal for 2021 to cook at home more often. You can try out new recipes with your family, recreate your restaurant favorites at home, and perfect old-favorite comfort foods. Not only will this be better for your wallet, but it will also be better for your family’s health.

Discover More Financial Planning Tips

With the new year ramping up, many of us are looking for ways to be smarter with our spending. Make sure you have a solid spending-and-savings plan and consider refinancing your mortgage. You should also take this opportunity to increase your investments and aim to cook more at home.

If you’d like to find more financial planning tips, check out the rest of our site at Graham Wealth Partners. We can help you manage your portfolio, build your wealth, and plan for your future. Book a meeting today and start creating a future that’s secure and prosperous.