What key financial planning moves are you making in the near term?
The pandemic taught a lot of people to rethink their lives — and their finances. For example, unemployment has been rampant during this time, and it led a lot of people to realize the importance of having money tucked away in savings for emergencies.
But on a positive note, the pandemic may have inspired some people to set new financial goals and work on improving their financial outlook. Here are Americans’ top five financial priorities over the next year, according to Northwestern Mutual’s 2021 Planning & Progress Study.
1. Paying bills and expenses
Covering near-term needs gets top billing for a lot of Americans, and given that many struggled in that regard during the pandemic, this is understandable. If you want to do a better job of keeping up with your expenses, set yourself up with a budget. That will help you track your spending and help ensure you don’t go overboard.
2. Saving for retirement
Seniors who rely on Social Security to provide all of their retirement income often struggle financially. So it’s encouraging to see that many Americans are making a point to set money aside for their golden years. If your company offers a 401(k) plan, signing up could be a smart move, especially if your employer matches worker contributions to some degree. Otherwise, shop around for an IRA you can manage independently.
3. Paying off debt and loans
A lot of people had no choice but to take on debt during the pandemic. And many Americans already had loans or credit card balances before the crisis began. The sooner you pay off debt, the less money you’ll spend on interest. Having a budget in place will help you better manage your money so you can chip away at your balance more easily.
4. Taking care of family
The pandemic forced many families to stay apart for well over a year. Now, Americans say that taking care of family is a priority. Whether your goal is to set your children up with an education fund or assist an aging parent, once again, following a budget is a great way to help ensure you have the money you need to meet this important goal.
5. Investing
Investing is a great way to turn the money you’re not using right now into a larger sum over time. Now, you should never invest your emergency fund — that money should stay in a savings account so it’s there for you when you need it. But if you have extra money, opening a brokerage account and buying stocks is a good way to grow wealth.
If you’re not sure how to get started with investing, look for a brokerage that’s loaded with resources to help you out. You may want to favor a brokerage that offers fractional share investing. With fractional share investing, you buy partial shares of stock instead of full shares, which gives you the flexibility to build a more diverse portfolio on a budget.
Whether you were impacted financially by the pandemic or not, now’s a good time to reassess your financial priorities and establish some new goals you can meet. It may be the case that the above priorities match up with yours. Or maybe you have different goals. Maybe you want to buy a house or save up to start your own business. The sooner you commit to your goals, the more likely you’ll be to achieve them.
