2021 Financial Goals

I recently reviewed my 2020 goals and have already set my personal goals for the year. That means it’s time to set my 2021 financial goals.

I like having goals. I think they’re a good way to keep track of your progress and motivate oneself to do something you might not normally do. You certainly don’t need to set goals to end up successful but I do think it makes it easier to have a target to shoot for every year.

I’ve found that tracking these throughout the year as I do in my monthly dividend and expense reports gives me insight into what needs to be done to reach my goals by the end of the year. I’ve had years in the past where I saw mid year that I was trailing behind and it made me try harder to save more money and spend less before the year was over.

I certainly wouldn’t have that motivation if I didn’t know my goals ahead of time.

That’s the power of goals and why I set them and track them every year.

These 2021 financial goals are not meant to be driven by external forces but only by things I can control. For example, I won’t try to grow my portfolio by 10% because if the market tanks, I have no chance to hit that goal. However, I can certainly save more money than I did last year. Still, there’s always going to be some external force in most goals but I try to minimize them when possible.

If this is your first time seeing my goals, I like to set them up in three tiers so kind of like medals. The bronze is meant to be something that’s reasonable to reach while silver and especially gold require a ton of work on my end. I’ve generally done a pretty good job at setting these but the reality is that I should be hitting mostly bronzes if I set them well.

Last year’s financial goals ended with 1 silver, 5 bronze medals and 4 failures which makes sense in a tough year like 2020. I hope to do better this year but I’ve already started off on the wrong foot with an expensive January and February due to some medical costs.

Do I have any rewards for hitting these goals? NOPE! Just the sweet taste of success. After all, these aren’t meant to be anything overly serious and I don’t want feel bad if I fail them. Shit happens in life and I have to be aware of that and not be too upset if failures happen.

These 2021 financial goals are meant to motivate me but also not depress me at the end of the year. That’s what good goals should do. Hopefully they can give you some ideas to aim for in your own financial life but if not then you can follow along as I try to improve my financial position in the next year.

Portfolio Goals

Goal One – Invest more capital

• Bronze – Invest more capital than in 2020
• Silver – Invest 7.5% more capital than in 2020
• Gold – Invest 15% more capital than in 2020

This is a normal standby for me every year. I like this goal because it’s simple and easy to track and compare. I’ve done a good job of increasing the amount invested every year until 2020 where I actually invested quite a bit less than the year before.

It wasn’t a surprise. After all, we bought a house and I had a bunch of random health expenses near the end of the year that led to a very negative savings rate month in December. That’s continued into 2021 with a negative January and I don’t expect that to end anytime soon which might make this a tough goal.

However, since we’re not traveling and not actually buying a house, it’s always possible. March will be a big part of how this goes because I get my bonus then and my raise so we’ll see if that’s at all decent. I don’t expect my salary to go up much but any little bit will help me save more through the year.

Goal Two – Collect more dividends

• Bronze – Collect $15,500 in dividends
• Silver – Collect $16,500 in dividends
• Gold – Collect $17,500 in dividends

I was aiming for $15,000 in dividends last year as my bronze goal(which would have been a 16% growth rate over prior year) and ended the year with $13,930.48 or a 7.8% growth rate over the year before. There were certainly some external forces in this failure such as lower bond yields and some minor dividend cuts.

However, there was also an internal force in this due to my higher rate of investments in SPACs which don’t pay any dividends. This was good for my portfolio size but not for my dividends.

Still, growth even if smaller than I wanted it to be was great and I certainly want to see the trend in the graph below continue.

However, for 2021, I’m lowering my expectations a bit and aiming for an 11.2% growth rate. I think this is reasonable as I get back into more standard investments and keep re-investing my current dividends. This is one goal that does have some external impacts as further dividend cuts will certainly affect my ability to hit this but I’m hopeful we’re past that hump and on the road to recovery at this point. I’m certainly investing more in my M1 dividend aristocrats portfolio which should help drive decent monthly results.

For silver, I’d have to grow dividends 18.5% and for gold, I’d have to grow them 25.6% which is certainly quite a bit more than my historical growth rate.

It’s not impossible but it’d require a lot of investing and some decent dividend growth rates from stocks I hold.

Savings Goals

Goal One – Achieve a certain gross income savings rate

• Bronze – Gross income savings rate of 33%
• Silver – Gross income savings rate of 39%
• Gold – Gross income savings rate of 45%

I saved 35.5% of my gross income in 2020 so I think the goals were set pretty well last year. Ever since I read it in some book, I’ve liked the idea of saving 1/3rd of your gross income.

1/3rd goes to savings, 1/3rd to taxes/charity and 1/3rd to expenses and I’ve followed that rule as a basis for my savings. I always aim for 1/3rd of my gross income going to savings and achieved that by limiting expenses and minimizing taxes(via investing in my 401k and HSA).

That’s no different this year but I’m hopeful I can get closer to that silver medal.

Besides medical expenses and some potential home purchases, I don’t expect anything major this year so we’ll see how that goes.

Goal Two – Achieve a certain savings rate

• Bronze – Savings rate of 44%
• Silver – Savings rate of 51%
• Gold – Savings rate of 58%

While the gross savings rate takes into account taxes, this is just a pure comparison of savings and expenses.

These two do move hand in hand so success in one mean success in the other. Last year, I had a savings rate of 47.7% which is just shy of that 50% mark. I’ve ticked up the bronze medal a bit this year but kept the rest the same.

I think both these savings rates are worth tracking. Gross income is relevant now but when I retire, it’s likely that my income will be a lot lower and taxes will be as well which makes this a lot more relevant. Using retirement accounts like the Roth or HSA will help with minimizing taxes and our expenses are low enough that our tax rate could be near 0% upon retirement most years.

Goal Three – Achieve a savings rate of 50%+ in X months

• Bronze – Savings rate of 50%+ in 6 months
• Silver – Savings rate of 50%+ in 9 months
• Gold – Savings rate of 50%+ in 12 months

This is a month specific savings rate goal and one I’ve been able to hit most years. While I certainly have some bad months that take down the overall savings rate(like December and January being negative), I also have a lot of months that are above 50% which boost the overall results. I already know February won’t be great(might be negative too!) but I still have the rest of the year to make up on the first two months.

There’s months where this is pretty easy to hit like the month when I get my bonus(can you guess which one that has been historically) and the two three paycheck months I get every year. You can see some of that in the graph below.

Even in a year like 2019 when I bought a house or in 2018 when I got married and took my honeymoon, I was able to hit the savings rate in at least 6 months.

I often find that some expenses are concentrated in certain months and I my usual spending is low enough that I can do this even if I buy a small thing or two that month. I’ll certainly be buying more stuff here and there as a new home owner but I’ll still try to hit this goal. I’ll certainly need to if I want to nit the above two goals as well.

Goal Four – Make additional mortgage payments 

• Bronze – Make additional principal payments equal to one month’s mortgage payment
• Silver – Make additional principal payments equal to two month’s mortgage payment
• Gold – Make additional principal payments equal to four month’s mortgage payment

Even though our mortgage interest rate is low at 2.75%, I like the idea of paying my 30 year mortgage down faster.

In fact, I’d like to be able to get it done in about 10 years and be ready to retire by then. It’d be awesome to not have that big payment on the expense side of the equation when that time comes.

Even if we don’t do that, paying additional principal towards your mortgage might allow us to recast our mortgage somewhere down the line and lower the payment if we need the additional cash flow.

This goal is simple, I want to make additional payments towards the principal of the mortgage equal to 1-4 months of our mortgage payment. I’ve already made some payments towards the principal in February(worth about 16% of a monthly payment) and plan to make more through the year.

This should also help my savings rate as I’ll track the additional equity as savings instead of expenses since it’s a direct reduction of future expenses and an increase in net worth. I’ll probably track it both ways and try to achieve my goals above without the need for additional equity being tracked as savings but we’ll see how that goes.

Expense Goals

Goal One – Reduce monthly bills

• Bronze – Reduce one bill in 2020
• Silver – Reduce two bills in 2020
• Gold – Reduce three bills in 2020

This one is simple. Utility companies, internet and phone providers and others always have a tendency to raise your price.

Generally many people ignore that but sometimes a simple phone call can mean a direct reduction in price for the same service or a change in service that leads to a reduction in price.

I already have Comcast on the list for this as they’ve raised prices recently for my service so I have to make my annual call and complain and change my service to something cheaper call. In general, that has led to lower prices every year for the same service but I’m also happy to change what I get if it means a lower price.

Goal Two – Cover discretionary expenses with side hustles

• Bronze – Cover one of my expensive discretionary expenses with a side hustle
• Silver – Cover two of my expensive discretionary expenses with a side hustle
• Gold – Cover three of my expensive discretionary expenses with a side hustle

This is a fun one for me. I always want stuff and one of my personal goals for the year is to treat myself but it’d be nice to find some side hustles where I can cover these expenses.

I do need a new phone, maybe I’ll buy an apple watch if the new release has some cool tech in it and maybe I’ll get some other stuff too. It’ll be interesting to see if I can do some tasks on the side to cover these costs. This is almost always a failure since I never end up doing anything but maybe this is the year.

After all, if I get a phone with a sweet new camera, I can upload some of the amazing photos I take to stock photography sites and make dozens of dollars!

Income Goals

Goal One – Increase income

• Bronze – Increase income(2021 vs. 2020) by 2%
• Silver – Increase income by 5%
• Gold – Increase income by 10%

This is a simple one and driven mostly by my day gig. I don’t really earn any significant money via any side hustles(besides some minor income from stories I wrote and self-published years ago) so most of my income is via my salary.

I’m in a spot in my career where I’m getting ~2% raises every year and probably have to move jobs and take on an upper management role to get a significant raise and that’s not a thing that sounds very appealing to me. I’ve got a pretty good gig that’s not too stressful and pays relatively well and I get to work with people I like so I’m probably going to stick around for a while.

That means unless I see a significant uptick in sales of my crappy short stories or take on another high earning side hustle, my income is unlikely to go up a ton.

Goal Two – Make a profit on the blog and donate to charity

• Bronze – Make $100 on the blog and donate it to a charity
• Silver – Make $300 in profit on the blog and donate it to charity
• Gold – Make $500 in profit on the blog and donate it to charity

I actually made a tiny bit of money on this blog last year and that all went to charity and I hope to expand upon that this year. I’m not really monetizing this blog that much to keep the user experience solid and I haven’t done any sponsored posts at the moment. Sure companies reach out but it’s never a company I like and I don’t want to do sponsored content just for the sake of money at this point.

I’m sure one day I will sell out in a big way but for now, the donations to charity will likely remain small.

This blog was never designed to be a big money maker and I plan to donate most profits from it to charity in the long run. Sure, if this somehow blows up and I can take this on as a full time role and pay myself a salary, that’d be cool but I’d still donate a lot to charity in that instance after covering my costs and salary. Of course, due to my lack of consistent posting and lack of marketing, that’ll likely never happen so small donations to charity will have to do for now!

2021 Financial Goals Overview

I had 8 goals in 2018, 9 goals in 2019, 10 goals in 2020 and I’m keeping it that way going forward.

I think ten financial goals is a good enough number and I don’t want to add financial goals if I can’t think of anything valuable. Most of these 2021 financial goals are pretty similar to goals I’ve had in the past but that’s a good thing.

After all, knowing your goals and having a template for them makes them easier to set, remember and track throughout the year.

I do think goals should be easy to track, achievable and motivational and these ten certainly fit that bill. I’ve gotten a lot of value out of setting financial and personal goals in the past few years and think it’s something most people should be doing.

These things are not meant to make you feel bad if you fail but to motivate you to do better next year if you do. Like I mentioned before, I don’t expect to hit all these goals nor do I expect to rise above bronze in many of the goals I set. That would be unrealistic.

Hopefully these financial goals give you some ideas when it comes to setting goals of your own. A lot of the goal articles I’ve seen online are super vague and I think that’s really setting up the user for failure. Think more about your expenses or better manage your money are not goals because there’s no set end point or actual goal to meet or track again.

How the hell do I know if I thought more about my expenses this year? It’s ridiculous and that’s why my goals are direct, have an actual end point and metrics by which to measure that end point. Financial goals deal with money and making them specific is very easy and that’s why I think I’ve had such success with my financials through the years.

I know I’ve certainly gotten better by setting goals and I hope you can too!