Top 5 Strategies for Personal Finance in 2021

Strategies for Personal Finance

Top 5 Strategies for Personal Finance in 2021. It’s no secret that tons of things are changing as we try to find our “new normal” these days. Personal finance is no exception to this rule. 

As our economy shifts and reacts to the effects of the pandemic, so do the rules of engagement in the realm of personal finance.

Some of the popular trends in personal finance for 2021 are as follows:

  • Get over your FOMO (fear of missing out)
  • Increase your emergency fund (aim for 6-12 months of living expenses)
  • Create your “bare essential” budget
  • Don’t pull out of the market
  • Focus on earning more, rather than spending less

Some of these “rules” have been around for ages and some are fairly new. Either way, they can help you and your family make a plan for financial stability. 

In this article, we will discuss each of these concepts in more detail and how you can apply them in your own life.

Get Over Your FOMO

It may sound like total gibberish, but “fear of missing out” is a real thing and always has been. Earlier generations typically referred to it as “keeping up with the Jones’s,” but it’s the same concept. In essence, it is spending frivolously to compete with those around you.

Modern financial advisors are encouraging people to focus on their situations and build plans that work for them. 

Social media can be a distraction and make you feel as though you’re missing out or not as successful as your friends. Be mindful that this is an illusion and that everyone has their own path to success.

Increase Your Emergency Fund

Traditional advice has always sets the recocomendation for an emergency fund at around $1,000 for a “rainy day”. However, in COVID times, this is simply not enough. 

With more and more people experiencing furloughs or job loss, you should aim for 6-12 months of living expenses in your emergency fund.

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This can seem like a daunting number when you first look at it, but it can be achieved. Simple tips such as making auto-payments from your checking to your savings with each paycheck will help. You might have to go without your Starbucks latte every morning, but making coffee at home really isn’t so terrible.

Create Your “Bare Essential” Budget

This is painful to admit, but most of us think that certain things are “essential” when they are just “enjoyable.” 

I’m talking about things like:

  • Netflix
  • Cable
  • High-speed internet
  • Dinners at nice restaurants
  • Morning lattes
  • New clothes
  • Golf outings

Whatever your interests, chances are that you have some things in your current monthly expenditure that are unnecessary. 

When we talk about the “bare essentials,” we are talking about food, shelter, utilities, transportation, and childcare. We are not talking about getting your hair and nails done or having a membership to the newest gym that just opened.

Being able to differentiate between “need” and “want” is a critical skill in this new world of pandemics, job loss, and instability. You have to be disciplined enough to cut the cord on things you don’t need. This is especially true if you or someone in your household has experienced a job loss.

Don’t Pull Out of the Market

A big part of financial stability is taking risks. Although some new investing advice might steer you to pull out at certain times and reinvest at certain times, the vast majority of us are not educated enough in the stock market to make the best decisions at the right times. 

There are different schools of thought in this realm, but many modern financial advisors are telling their clients to stay the course.

If you have a significant amount of money in stocks and bonds, have a conversation with your financial advisor. Make sure you’re comfortable with the plan and with the level of risk in your portfolio. Don’t make a blanket exit from the market, because that’s what causes it to crash – mass exodus and fear.

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Focus on Earning More

Although it seems like a difficult thing to do in today’s market, focus on making more money, rather than cutting expenses and living as frugally as possible. 

The wealthiest people in the world did not concern themselves with cutting back, but rather with earning more. Whether that comes by working harder to earn bonuses or picking up a side-hustle, now is the time to try to earn as much as possible.

That being said, when you start earning more, it doesn’t mean you should spend more. Each time your earnings increase, you should defer that amount of money into savings, retirement, and investment accounts.

If you were doing just fine on what you were making before your promotion or side hustle, there’s no reason that you can’t continue doing just fine on that amount of money.

Additional Strategies

Other ways to get financially stable in 2021 include:

  • Refinancing your mortgage
  • Using your stimulus check to create a savings account
  • Re-quote your car insurance

Every little bit will help, no matter how you choose to make moves. For example, mortgage rates are pretty low right now. If you’ve got good credit and a refinance makes sense for you, go ahead and do it!

This may go without saying, but don’t waste your stimulus check on a shopping spree or a night out on the town. If you don’t have any major bills hanging over your head, consider using it to start or enhance your savings account. Chances are the money will come in handy later on.

Many advisors have been saying this for years. You should re-quote your car insurance every year to make sure you’re getting the best rates available. This might be a lot of work but it can often save you hundreds or even thousands of dollars. 


2020 has been a doozie on many of us in terms of financial stability and job security. Making some smart money moves right now is a great strategy for setting yourself up for success in the future. Give yourself the benefit of trying some of the strategies we’ve discussed and see how much of an impact they can make!


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