hiker looking out thinking about 2021 financial goals

Setting Effective 2021 Financial Goals

How has your year been?

October starts the fourth quarter of the year. In the business world, top companies kick off “Q4” by gathering together their leadership teams to assess what’s gone right this year, what’s gone wrong, and what steps they can take to finish the year with strong forward momentum. My partner, Katie Brown, and I did just that last week with a full day off-site meeting to think about the end of 2020 and the potential for 2021. We wrapped up a day of strategy with a dinner with our spouses to talk about the past and future for the business and our families.

Preparing for a positive Q4 sprint could also help you end this difficult year with a real sense of personal accomplishment. Answer these three questions and put an action plan in place to achieve your most important goals and start laying the groundwork for 2021 financial goals as well.

What are my top goals for the next three months?

We’ve all had to deal with a myriad of challenges and changes in 2020. Those experiences probably had a profound impact on the goals you set for yourself way back in January. Perhaps, due to social distancing or work displacement, some goals just aren’t very realistic right now. Or perhaps the unique needs of your family and community inspired new goals that have jumped to the top of your list.

The space between the things we want to do and the things we can do in this environment might feel overwhelming. But if you try to do too much in a short space of time, you’ll only scatter minimal progress across targets that you won’t be any closer to hitting. Instead, reflect on how 2020 has affected you personally, professionally, emotionally, and physically. Focus your attention on one or two practical goals that will give you the most fulfillment. File away any goals that don’t make the cut for your 2021 financial goals game plan.

My goals for the last months of 2020 all had to do with closure. I am proud of my team’s progress this year, despite the pandemic. Some goals are on the five yard-line and getting to resolution is important to set up next year’s plan. We resolved to finish what we started and then compound that success.

What can I do today to reach my 2021 financial goals?

Once you’ve broken down your list of goals, it’s time to break down those goals even further into actionable daily steps. These little achievements will build up to major accomplishments over time if you’re diligent about crossing them off your to-do list.

Again, some of your goals might have to change to accommodate 2020. Your “exercise three days per week” goal might have to take place in front of a computer rather than at a gym. This step might also help you improve a vague goal, like, “I want to give back,” with a more specific and actionable step, like, “I’m going to call the local food pantry and see if they have any volunteer opportunities.” Making that phone call will lead you to another actionable step that you can take tomorrow, and so on.

We choose three words that we want to define our year and the first of those in 2020 was “Focus.” I remind myself each day to do fewer things that are more impactful.  I recently read the book Deep Work by Cal Newport, which was a great reminder of the importance of focusing on the non-urgent, important work. Each day is an opportunity to be brutally honest about the most important actions that will make incremental progress.

How will I hold myself accountable?

Effective goal setting creates a stepladder that builds on the previous day’s progress and keeps you moving closer to your ultimate goal. But some days getting up on that ladder is easier than others.

Many folks maintain motivation via short-term rewards. For example, when you’ve made it halfway to your savings goal for a down payment on a new house, treat yourself and your spouse to a nice dinner. If you accomplish your daily job search tasks for four days in a row, give yourself a Friday afternoon off and watch a movie or play a round of golf.

Another strategy is to track your progress. There are many online tools and apps you can use to check off daily tasks. It could also be fun to personalize a pen-and-paper journal that combines your to-do lists with reflections on your journey. I always carry a Moleskine notebook with me and I have dabbled in the Bullet Journal technique to help me manage my days and note my lessons learned along the way.

Finally, there’s no stronger accountability system than other people. Knowing that your running buddy is waiting for you on the trail will get you out of the house even when your bed is especially cozy. And whatever you’re trying to get better at, you can find groups of likeminded strivers online who will inspire you to write more, cook healthier meals, sand down the rough edges, and learn the next three chords.

We would love to be part of the support system that helps you achieve your 2021 financial goals. Let’s schedule a Q4 review and discuss where you want your financial plan to lead you by the end of the year and into next. We are here to help.