5 tips to focus on your financial goals in 2021

If you're like most, you're ready for a new year with fewer challenges to your health and wealth than 2020 presented. While this post won't help you avoid COVID or shed that unwanted quarantine weight, will provide essential tips to reorient your financial goals.

Even if you are not interested in annual "resolutions", the New Year is a perfect time to reflect on the past, analyze the present and dream about the future. That's the best way to bridge the gap between where your personal and business finances are today and where you would like them to be.

Having goals and a general plan is one of the easiest ways to control your finances and reduce stress. Use these tips to identify your financial goals big and small, and stay focused on achieving them in 2021.

1. Make an annual review

It doesn't matter if remembering last year is painful or fun, you can probably learn lessons that will make this year better. Ask yourself critical questions about your personal and professional life, including:

What did I accomplish last year that I am proud of?
What, if anything, worked well for my finances?
What commercial products or services brought me the most benefits?
What disappointed me the most in the past year?
Where are my best financial growth opportunities?
What did you teach me last year?

Use an accountant or accounting software to run financial reports, such as an income statement (also known as a profit and loss statement) for the past year. Show your income and expenses for a certain period. Review what you earned and spent, and look for ways to increase your earnings.

2. Analyze your current finances

After looking back, turn your attention to your current financial situation. By running a balance sheet or updating a personal financial statement, you'll have a snapshot of your financial health today.

Your balance sheet shows what your business owns, owes, and the owner's equity. Also, a personal financial statement shows your assets and liabilities and calculates your personal net worth.

If you are not comfortable reading various financial reports, enlist the help of a business advisor or accountant so that you can use these valuable tools to better manage your personal and business finances.

3. Dream about the future

For financial goals to be met, they must be meaningful to you and your family. Spend time thinking about how you want your business to evolve. Consider how you want your life to be in the near future. What business and personal accomplishments would you be proud to achieve between now and then?

If you find it difficult to dream of a new and improved future, another approach is to identify the aspects of your financial life that concern you the most. Need to find a business partner, use better contractors, or build a bigger cash reserve to get through tough times? Creating solutions that reduce personal and business stress can be an excellent goal to achieve in 2021.

You can choose a word, slogan, or theme for the year to return to and support your financial goals. For example, 2021 could be "The year of reinvention," "The year of emergency savings," or "The year of outsourcing."

4. Incorporate goals into your budget

Once you've reviewed the past, analyzed where you are now, and have fully considered what you want to achieve, it's time to incorporate your goals into your financial plan or budget. Most accounting programs link to your financial accounts so you can budget, create reports, pay bills, and perform many advanced functions.

Once you understand your cash flow, you may need to tweak it to achieve your goals. For example, if you want to maximize a retirement account for freelancers or create a cash reserve in 2021, you can break it down into smaller quarterly or monthly goals.

If you don't set your spending plan to take into account your personal or business financial goals, they are unlikely to happen.

5. Remember your goals

Once the sparkle of a new year wears off, it's easy to forget your financial goals. One way to make sure you meet them is by using automation. Here are some ways you can automate your financial goals in 2021:

Use digital tools, such as automated email sequences, to connect with current and potential customers and gain market share.

Set up automatic contributions to a retirement account for freelancers , such as an IRA, SEP-IRA, or just 401 (k), before you have a chance to spend them.

Create recurring transfers from your business or personal checking account to a savings account to create your cash cushion.

Set up recurring payments to send more to the debt you want to get rid of faster.

Having a realistic plan to turn your business and personal dreams into reality will go a long way towards your success no matter what is happening in the world.

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