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Stocks get a rocky start to 2021, gas prices may rise: The headlines and your money

GasBuddy expects an average national price increase of 27 cents per gallon in 2021.

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Markets start off the year in decline, and gas prices could go up by 27 cents per gallon in 2021. Here's how the headlines could affect your money.

Stocks start 2021 with a dip

After closing out 2020 at record highs, both the Dow and S&P 500 dropped, falling 1.3% and 1.5% on Monday, respectively. That's the first negative start to a year since 2016.

Fueling the drop: traders' worries about rising coronavirus cases and Tuesday's Georgia Senate runoff, which will determine which party has control of the Senate when President-elect Joe Biden takes office later this month.

Stocks improved slightly Tuesday morning.

Gas prices predicted to rise

U.S. spending on gasoline dropped by nearly $100 billion in 2020 as a result of the coronavirus pandemic. But fuel data company GasBuddy expects it'll pick up again in 2021, with spending rising to $325.6 billion.

Pay attention to prices at the pump: Part of that spending increase will come from an average national price increase of 27 cents per gallon. Even so, GasBuddy expects most of the U.S. will see prices remain in the $2 per gallon range, although major cities like Chicago, New York, and Philadelphia could see average prices rise above $3 per gallon.

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Financial New Year's resolutions 

Your first paycheck of 2021 should arrive soon, which makes this an ideal time to start implementing financial New Year's resolutions. To make a big goal less daunting, calculate how much you'll need to save per paycheck. Then set up automatic contributions to make it easy.

Maxing out your IRA in 2021, for example, works out to $231 per paycheck if you're paid biweekly, while building a $1,000 emergency fund is just $38.

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Words you've heard: Emergency fund

An emergency fund is a savings account where you set aside money for unexpected expenses or a job loss.

Many financial advisors recommend aiming to set aside funds equivalent to 3 to 6 months of expenses. But financial expert Suze Orman recently told Grow that she thinks many people would benefit from having an emergency fund that covers a year's worth of expenses.

Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.

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