By Dr. James M. Dahle, WCI Founder
New year, new you right? It's that time of year again. It's time to set goals and to work hard toward them for two weeks before we forget about them. Well, hopefully not, but maybe it would be best if you could set goals that can be accomplished by the end of January just in case.
I hope you include at least one financial goal in your New Year's Resolutions for 2021. Katie and I have two, which I'll discuss at an appropriate place later in the post. If you need some ideas about a goal for you to work on this year, steal one from the list below!
Top 10 Financial Goals for 2021
If you're like most doctors, you should probably be working on more than one of these goals, but today I just want you to focus on your biggest priority and commit to accomplishing it this year.
#1 Buy That Insurance Policy You Need
A huge percentage of doctors don't have all the insurance they need. If you need, but don't yet have, one of the following types of insurance, commit now to get it done this year:
When you need these insurance policies, nothing else will take their place. GoFundMe is not a life insurance company. Be sure to use a recommended, experienced independent agent to get your disability and life insurance.
#2 Buy a House
Lots of people think I'm against owning your home just because I think most residents ought to rent. Not true. In fact, about 80% of the net worth of the median American is home equity. I hope that's not the case with you, but there is little doubt that most of the time, in most areas of the country, if you are going to live somewhere longer than five years, you are highly likely to come out ahead financially if you own your home. This is a big step for most of us in our financial lives and if this is one of your goals for 2021, I hope you accomplish it. If a conventional mortgage doesn't make sense in your situation, at least save PMI and use a physician mortgage.
#3 Refinance Your Student Loans
Knocking 2–5% off the interest rate for your student loans is a worthwhile accomplishment. Interest rates have dropped dramatically over the last year. If you are not going for PSLF, not getting a REPAYE subsidy, and have not yet refinanced your student loans, this goal should be on your list for 2021. Private loans should be refinanced as soon as possible, but you probably ought to wait to refinance your federal student loans until the special 0% interest rate period ends (currently scheduled for Feb 1 but will possibly be extended a few more months). Be sure to use the WCI refinancing links when you do so. You get the best deal on the internet, you get hundreds in cash back, and you help support our mission to promote financial literacy among docs. Just because you refinanced a year or two ago doesn't mean you can't do it again!
#4 Pay Off Your Student Loans
Refinancing the loans is only the first step. Then you have to pay them. Over the last year, we have been highlighting the excellent work many of you have been doing crushing your loans. We will continue to do so. This is no small feat— you should be proud of it! Please share with us when you do it!
#5 Pay Off Your Mortgage
You know what else frees up a lot of cash flow in your life? Getting rid of other debts, especially a big mortgage payment. “Normal” people don't even pay off their mortgage in 30 years. Why be normal? Just switching to a 15-year mortgage cuts the time in half, but why stop there? If you're getting close, put this one on your list of financial goals for 2021.
#6 Max Out Your Available Retirement Accounts
Is this the year you finally get that Backdoor Roth IRA going? Most of the financially successful doctors I know take maximum advantage of their tax-advantaged accounts including 401(k)s, 403(b)s, 457(b)s, cash balance plans, HSAs, Roth IRAs, and even 529s. Maybe it's time for this financial goal in your life.
#7 Start That Side Gig
Many of us realized our income wasn't as guaranteed as we thought it was in 2020. If you've ever wanted to start a side gig, 2021 is the year. It'll take a lot more work than funding a Backdoor Roth IRA, but, hopefully, it will also provide a lot more reward. Curious what some of your fellow docs are doing? Check out this list.
#8 Get a Written Financial Plan in Place
#9 Update Your Estate Plan
Here it is. This is our big financial goal for 2021. It has seemed so overwhelming to us as our financial lives have become more complicated, but it can't be put off any longer. Our original estate plan is now grossly inadequate for our needs. I suspect this is the case for many of you, as well. Maybe you need a will, maybe you need a trust, maybe you need to look over your beneficiaries, or maybe you just need to move your assets into your trust. Let's work together to get it done this year. I'm sure I'll be doing some posts along the way to keep you updated.
#10 Hit Financial Milestones
Still haven't found a financial goal for 2021? Okay, we'll find one for you in this section. Here's a list of popular ones. Feel free to steal whatever one you like.
- Get back to broke (i.e. hit a net worth of $0, a big accomplishment when you start your career at a net worth of -$300K)
- Become a millionaire
- Save a certain amount ($25K, $50K, $100K, $200K, or hit a certain savings rate)
- Get a million dollars into your investment accounts
- Become a pentamillionaire
- Become a decamillionaire
- Hit your financial independence number
- Increase income by a certain amount
- Pay a certain amount in taxes ($100K, $200K, $1M. Hard to get excited about this one until you realize it's really a reflection of income)
- Give away a certain amount of money (This is our second financial goal for 2021)
I'm sure there is a goal in this list for you this year. Write it down. Talk about it with your friends and family. Post it as a comment below so we can help keep you accountable. You can do it, we can help!
What do you think? What are your financial goals for 2021? Comment below!
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