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How to organize and prepare your finances for 2021

The end of the year is always a good time for a financial health checkup — more so than ever this year, with all of the disruption caused by the COVID-19 pandemic. While 2020 brought many unexpected changes — and we can’t predict what 2021 will look like — getting organized and creating a plan moving forward can put you in better control of your financial future and help you weather whatever challenges come in the new year.

Focusing on the areas and tips below can help you get and keep your financial life on track in 2021.

Start by looking back to help you move forward.

Take note of how much or how little your income, savings, debt, financial goals and personal goals changed over the past 12 months. As you look ahead to 2021, focus on the areas below to help you determine what adjustments you should make — and would like to make.

Spending and budgeting.

Examine how your spending categories have changed over the past year. Are you spending less on transportation and more on online shopping? If you have extra money saved and know you have a big purchase coming up, like replacing a home appliance, could you pay cash versus putting the purchase on a credit card?

If your income has dropped, look at areas where you can cut spending. Likewise, if your money is going toward things you can easily cut or aren’t that important to you (like that extra latte), consider diverting those funds somewhere else, like into savings or toward paying down debt.

“One silver lining that’s come out of the events of the past year is that people are paying more attention to their finances,” explains Nathan Black, Client Experience Manager for Commerce Financial Advisors. Black recommends creating a budget and a balance sheet to see what money is coming in and where it’s going.

“There’s no right or wrong way to organize your finances,” he explains. “Whether you use an app, a spreadsheet or some other method, the key is to find a system that you’ll stick with.” However, he suggests using a system that lets you sync and track your income and expenses, like QuickBooks® or Mint®, for example, so you can see where you’re spending and make necessary changes.

It’s also a good idea to review your debts, including your total balances, interest rates and monthly payments. Decide on a pay down strategy like focusing first on the debt with the highest balance or highest interest rate.


Did you spend your emergency savings or accrue debt due to the pandemic? The past year has taught us that now, more than ever, it’s important to have a financial cushion. An emergency savings account can provide the flexibility to adapt if situations change. For instance, if your employer requires you to take a number of unpaid furlough days in 2021, an emergency savings account can help you manage essential expenses during a temporary income reduction.

To make it easier to save, Black recommends paying yourself first whenever you get a paycheck. If you can automate the savings, such as having a portion of your paycheck directly deposited into your savings or retirement accounts, that’s even better.

Black recommends organizing savings into three different types:

  • Short-term savings, like your emergency fund, should be kept in a place that’s safe and liquid, like a savings or money market account.

  • Intermediate savings, such as a funds for bigger goals, like a home upgrade or a car, can be kept in a taxable account, joint account or trust.

  • Long-term savings could be for retirement, a home down payment or a child’s education — money you won’t plan to touch for a number of years.


Review your insurance coverage on policies like life insurance, homeowners, renters and auto. Consider any lifestyle changes you may have made over the past year — such as driving less or creating a home office — and make any policy adjustments to ensure that you’re protected and paying for what you need, not more. It’s also a good idea to confirm that beneficiaries are up to date.


Has the pandemic caused you to consider a new career or build new skills by going back to school? Do you want to increase charitable giving to causes you feel strongly about? Black recommends organizing goals by needs, wants and wishes and setting timeframes for each.

“Putting your goals in writing makes them more concrete and more likely that you’ll achieve them,” he says. “Challenge yourself to make your goals realistic and attainable, then ask yourself if you have enough money to accomplish your goals and how can you modify spending and saving to make those goals possible.”

Consulting with an expert, whether it’s a financial planner, tax advisor or estate planner, can help you create a plan to keep your specific goals on track.

4 tips to help you organize your finances.

As you review and prepare your budget and goals for 2021, keep these time-saving money management tips in mind to help keep your financial life on track:

  1. Invest in budgeting software to help yourself stay organized and plan for major expenses and goals, like a child’s wedding, college tuition or a home down payment.

  2. Take time to clean out old financial files you no longer need.

  3. Simplify bill paying and avoid late fees save by setting up automated payments; consider treating saving (for your emergency fund or other goal) like a bill by scheduling recurring transfers every month from your checking account into your savings.

  4. Use convenient banking tools like mobile apps and alerts to better manage spending and saving.

Stay on track with a solid financial plan.

Whatever your age or life stage, reviewing your current budget and planning for the year ahead can give you peace of mind that your finances are on track — or help you make adjustments to get there. If you need help planning for whatever 2021 will bring, we’re here to help. For questions about financial planning, money management and saving, or to learn about MoneyGuidePro, a powerful goals-based financial planning software used by Commerce Financial Advisors, contact us.

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