Financial Resolutions for 2021

FIRST PUBLISHED BY: CPA PRACTICE ADVISOR

The annual ‘fresh start’ that comes with a new year is fast approaching. This is a great opportunity for Americans to review their overall financial situation, check-in on their goals and set some new ones. To help Americans improve their financial standing in the year ahead, members of the American Institute of CPAs’ (AICPA) National CPA Financial Literacy Commission suggest the following 2021 New Year’s financial resolutions:

Continue Saving into 2021

“Many Americans found themselves staying home more often this year while observing COVID-19 safety measures. As a result, studies have shown that individuals aren’t spending as much, in some cases about 25%-30% less. These reductions are most concentrated in travel, entertainment, and restaurant spending. When things get back to normal, make a plan to ease spending back into your budget carefully so you can keep your saving rate going strong.” -Gregory J. Anton, CPA/CGMA, chairman of the AICPA’s National CPA Financial Literacy Commission.

Grow Savings by Banking Your Former Commuting Costs 

“If you’ve shifted from working from an office to working from home, consider re-directing your old commuting costs into a savings account. Keeping track of this ‘found money’ and saving it promptly can bolster your financial wellness substantially.” -Jina Etienne, CPA member of the AICPA Financial Literacy Commission.

Take Advantage of Any Debt Reduction Resources Available

“Whether it’s the result of being furloughed from work, working reduced hours, or losing a job, many Americans are struggling to make ends meet and keep current with debt payments. While they may feel like they’re stuck between a rock and a hard place, they shouldn’t assume debt repayment terms are locked in. Consider resources such as a forbearance on your mortgage or negotiating more flexible payback terms with your credit card company or landlord. It is always best to know all the options available.” -Michael Landsberg, CPA/PFS, member of the AICPA Financial Literacy Commission.

Check Your Withholdings 

“At the end of 2019, the IRS released a new W-4 form, which employees fill out so that their employer can calculate how much federal tax to withhold from their paycheck. Unfortunately, AICPA research shows that only 1 in 4 tax-filing Americans have utilized the new Form W-4. If you haven’t updated your withholding in the past year already, it’s a good idea to revisit that now to help make sure you avoid a surprise come Tax Day. If you feel more or less tax should be withheld going forward to fit into your financial plan, contact your human resource representative.” -Kim Hardy, CPA, member of the AICPA Financial Literacy Commission.

Improve Your Own Financial Literacy 

“Education is an investment in yourself. There are many sources for financial advice but blindly trusting just one of them can be a very expensive mistake. People work so hard to earn their money. They should not be frivolous with how they spend it or how it’s invested. Everyone should take a little time to educate themselves on financial literacy because being smart with your money will make all aspects of your life easier. The AICPA’s 360 Degrees of Financial Literacy website has some great resources to get you started. Start with articles in ‘The Basics’ section and explore wherever your interest take you from there.” -Matt Rosenberg, CPA/PFS, member of the AICPA Financial Literacy Commission.

Finally Create That Budget 

“The kickoff of a new year is a great time to collect all your recent bank and credit card statements, as well as sources of income and spending to create a baseline of income and expenses. Once you have a baseline, you can start breaking down expenses into needs and wants. The goal here is to weed out any ‘want’ that is negatively impacting your overall spending plan. Americans who need help creating and managing a monthly budget can use the AICPA’s budget analysis calculator to run a report that will show them where their money is going and identify areas for improvement.” -David Almonte, CPA/CGMA, member of the AICPA Financial Literacy Commission.

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To read all 21 Resolutions, visit CPA PRACTICE ADVISOR: 21 New Year’s Financial Resolutions for 2021