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Do these 5 things with your money today for a better 2021

American Household News

Making smart money moves can be doubly critical at year-end or the beginning of a New Year.

Americans are certainly eager to leave 2020 behind. But there's no reason to leave money on the table or make tax planning, investment or household finance mistakes in the emotional rush to begin 2021.

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Photo from Corporate Finance Institute -

Follow these strategies, tips and words of advice to enter next year on strong financial footing:

  • Give yourself some immediate tax relief by deferring income to 2021 - suggests James Landry, a Chartered Financial Consultant who is Chief Operating Officer and Director of Planning with Pallas Capital Advisors in Braintree, MA. "You may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may allow you to postpone paying income tax until next year," Landry advises in Pallas Capital's Year-End Planning Commentary. "If there's a chance that you'll be in a lower income tax bracket next year, deferring income could mean paying less tax as well."
  • Take a fresh look at your risk tolerance and rebalance your portfolio accordingly - That's the advice of Haley Tolitsky, a Certified Financial Planner with Cooke Capital in Wilmington, NC. "We have faced a significant amount of stock market volatility over the last year, which may have adjusted your risk tolerance," Tolitsky explained in this piece for TheStreet.com. "Now is a good time to reach out to your financial advisor or establish a relationship with one. It may also be a good time to realize losses in your taxable investment account." That action could offset capital gains and reduce taxable income by up to $3,000 in any given year.
"You can put up to $6,000 into an IRA in tax-year 2020; $7,000 if you are 50 or older." - James Landry, Pallas Capital Advisors.
  • Get Your House(hold) In Order - A smart everyday planning exercise for 2021 is creating a comprehensive new household budget, recommends Madison Block of American Consumer Credit Counseling in Newton, MA. "A household budget is the cornerstone of financial health ... and budgets don’t have to be complicated or intimidating," Block advises. The bottom line is your everyday financial life needs a balance sheet. A good budget serves that purpose while making you accountable for all monthly spending. It also is the best indicator of whether you need to generate more income, find areas in your budget to cut, or do a combination of both. The ACCC Talking Cents Blog has useful tools and resources including household budgeting worksheets.
  • Be Ready for a Rebound in Key Sectors Hard Hit by or Relevant to COVID-19 - It's hard to imagine, say, airline passenger volume returning to anywhere near normal soon. But vaccines are being rolled out and Americans can use a little optimism. Bet on even marginal improvements to the travel sector translating to potential investment gains. Hawaiian Holdings Inc., as one example, could be a worthy pick as its Hawaiian Air carries the majority of mainland USA passengers to the Hawaiian Islands. A whole host of business categories - including pharmaceuticals, personal protective gear, streaming services, construction and healthcare - are worth keeping close watch for positive trends.
  • Max Out Contributions to Your Retirement Accounts and DO Collect Free Money - Landry from Pallas Capital Advisors says the firm "strongly suggest(s) that you contribute the minimum amount necessary to receive your entire employer's (401k) match. Do not leave free money on the table." He also reminds clients that "You can put up to $6,000 into an IRA in tax-year 2020; $7,000 if you are 50 or older."

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