top of page
  • Writer's pictureHarry N. Stout

161: Four Actions to Make 2021 A Better Money Year

Updated: Jan 15, 2021

You made it. 2021 has finally arrived and the dark cloud that was 2020 is slowly dissipating. What could go wrong, did go wrong last year. I offer my Philadelphia Eagles and the pandemic as proof of this. In this post, I will suggest four money actions or habits you can start during January that can set your household up for a more successful 2021. So here we go with the four actions you should consider:

1. Invest time in learning. In our country today we require more education to drive a vehicle than we do to manage money. People are just not prepared to address the financial matters they face in life. As I have written previously study after study shows that Americans lose over $1,000 annually by not properly understanding basic household finance issues - that's about the monthly mortgage payment on a modest home or over two average car loan payments. There is payback to you in improving your financial literacy.

Financial literacy is defined as being educated about money and finance, with a special focus on an individual's personal finances. Being financially literate enables you to make smarter money management decisions that lead directly to a financially secure future, one that protects the assets built by you and your loved ones. Categories that typically come into play with financial literacy are everyday financial issues like budgeting, spending, debt, taxes, retirement savings, college savings, mortgage management and tax and estate planning.

As I wrote in the FinancialVerse – A Common Sense Approach for Your Money, there are 10 Must Do’s to manage your financial life. The first of those is to spend two hours per week learning and studying the world of personal finance. You need to make personal finance a basic priority for your time. I know many of you think two hours per week is not something you have time for. You live a full, time-constrained, crazy life and many of you may work two or three jobs to make ends meet. What I will tell you is that if you don’t spend time learning about better managing your money matters, you will not be able to reduce your financial stress and anxiety. Knowledge is power. You must make boosting your financial literacy a priority.

Today there are podcasts, newsletters, blogs, publications and websites that you can use to gain information, knowledge and research to use in your learning. Go to the Resources tab to find my suggested list of resources. I have developed these sources based on my experience, research and writing. From these resources, you will find more than enough content to fill your two hours per week.

2. Put a cash plan in place. Only 30% of households have a budget in place. At the same time you see numerous articles expressing opinions about the need to have one. Some articles promote the importance of having a budget. Others spell out the negatives of budgets by saying they are a waste of time, too constraining, not forward looking and all they do is track spending and nothing more. I think the budget naysayers are missing the point. You need to establish a cash budget and use it. If you can’t measure your cash flow you cannot manage it. The key to financial security is positive cash flow – having your cash income exceed your expenses. A properly constructed and used cash budget is your cash plan. The cash plan should cover your living expenses, debt service, savings needs and putting money away for when you stop full-time work. It will enable you to see if you are making progress towards your goals.

By putting in place a discipline to budget and reconcile your cash flow each month, you are creating an awareness of your spending, earning and financial flexibility that you can’t get any other way. Based on my experience, this process makes your money situation clear and understandable. The process reduces money anxiety and stress. It changed my life. It works.

3. Improve your earning power. You should focus on what you should be doing to protect or “future proof” your likely most valuable asset – your earning power. Today companies mostly pay for your skills and not your degrees. Here are three actions you should consider taking. I will have a more extensive post on this subject later this month.

  • Reskilling. The Cambridge dictionary defines reskilling as the process of learning a new skill so you can do a different job, or of training people to do a different job. For some people (e.g., airline pilots, Broadway performers) they are dealing with the need to reskill today as a result of the impacts of the pandemic on their businesses. For others reskilling is a task that they will need to embrace in the next decade as new Fourth Industrial Revolution technologies such as artificial intelligence are rolled out. You may need to reskill in order to qualify for new jobs and get the cash flow you need for financial security.

  • Upskilling. Upskilling is another action you should consider. Upskilling is the process of acquiring more advanced skills through additional education and training. This is the action where you proactively look to add better skills such as stronger problem-solving or project management abilities that allow you to drive higher personal productivity and better job performance. In short, you become a more valuable employee qualifying for higher compensation.

  • Buying Insurance Coverage. Actions taken to reskill or upskill can be planned and driven by you. On the other hand the impact of an illness or accident is unexpected and not within your control. That is where having the proper insurance coverages in place comes in. Insurance protects against the unexpected. To protect your income you should have a basic amount (determined by you and your insurance agent) of disability or income protection coverage.

Your ability to earn an income is likely your most valuable asset. Keeping your skills at a high and employable level is an increasing challenge in the age of rapid technological change. The onus is primarily on the individual to do this by investing time and money. At the same time there are situations beyond your reasonable control such as when the impacts of an illness or accident strike. To protect yourself against the unexpected there are available insurance products to purchase at reasonable costs. My advice is to build reskilling, upskilling and income protection insurance into your cash budget. Protecting that recurring paycheck is paramount in your journey to financial security.

4. Focus on cost savings. According to Bureau of Labor Statistics (BLS) Expenditure Survey released on September 9, 2020, the average household spent $63,036 during 2019. Let’s begin to focus on cost savings with these questions:

  • How much do you think you could save of that $63,036?

  • Could you save 1% or 2% or $630 to $1,260?

  • Could the savings you generate be used to help you pay off debt? Fund your emergency account? Add to savings for your later years?

  • Are you thinking about where to save money?

The answer to each of these questions should be a resounding yes. The next question you might ask is where should you start looking for savings? I recently wrote a post that discusses 6 steps you should consider taking to determine what the level of spending should be planned for your household and where to look for savings. The six steps each household should take are driven by objectively answering these questions:

1. How Aware Are We of Our Spending?

2. Where Should We Work?

3. Where Should We Live?

4. What Lifestyle Should We Have?

5. What are Our Transportation Needs?

6. How Does Our Spending Impact the Environment?

So there you go. You can find cost savings actions to identify and potentially act upon.

Opportunities to reduce spending and increase saving are abundant. All it takes is for your household to become more aware of its spending habits and where savings can be generated.


In this post, I have presented four ideas of actions you can take to improve your management of money. Follow along with us in 2021 as we offer ideas, resources and content to make your relationship with money better and your financial life less dramatic. Welcome to 2021 and best of luck to you in the new year!


If you like our posts, you’ll love our books. Our sole source of income for the FinancialVerse comes from sales of our books. If you would like to know more about the practical side of your money, give one of our books a read.

Our two most recently released books are:

The third book in the series, Today’s Annuity Products – A Tool To Create Protected Lifetime Income is now available for pre-order.

The FinancialVerse works to help you identify life’s financial challenges and provide suggested resources that you can pursue to educate yourself. The content is focused on consumer education and does not promote any particular product, service or company. If you value the content we provide, please follow us on Facebook and Twitter, ask others to subscribe to our free Moneysavers, or forward this post to your friends by clicking on the More Options icon in the upper right corner. Please remember we do not in any manner sell or share your contact information.

Thanks again for your interest in improving your financial knowledge!

18 views0 comments


bottom of page