on January 10, 2023
It’s a new year, and a new opportunity to start fresh with your financial goals. Maybe the holidays strained your wallet more than you would have liked. Or maybe you ran up some unwanted debt this past year. Or, perhaps, you’ve simply fallen away from responsible budgeting and/or financial planning.
Whatever the case, it’s time to steel your resolve and step into the new year with optimism and a financial plan!
Here are 6 ideas for relatively straightforward financial resolutions:
1. Automate Your Savings.
Establish a rule of thumb by setting up an automatic transfer from your checking account to your savings account each month on payday. Your goal should be to put away as much as possible, even if it just a small amount to start.
2. Start an Emergency Fund.
As I’ve addressed in past blog posts, creating an emergency savings fund is absolutely vital to financial well-being. Surprise expenses can easily crop up, and having an emergency fund can help keep you out of debt when the unexpected happens. It’s a good idea to figure out how much you typically spend each month, and save for at least three months (although many of my clients opt to save for the equivalent of six months worth of expenses).
3. Make a Budget and Stick to It.
One of the best financial resolutions you can make is to establish a budget and stick to it. Decide on a realistic budget, and make sure to include things like groceries, transportation, and entertainment in your budget. Track your expenses (apps such as mint.com can help!) and tweak your budget accordingly.
4. Pay Down and Eliminate Debt.
Whether it’s credit cards, student loans, or medical bills, it’s a great idea to make paying down debt a top priority this year. To keep yourself motivated, try setting a goal of paying off a certain amount of debt each month, or tackle the debt with the highest interest rate first.
5. Use Credit Cards Responsibly.
Credit cards can have especially egregious interest rates. When you’re thinking about using a credit card, ask yourself if you can afford to pay off the entire balance at the end of the month. If not, maybe it’s best not to use the card at all. If you already have credit card debt, make a plan to gradually pay off the debt until you’re back in the black.
6. Save for Retirement.
Too often, Americans put off saving for their retirement until they can see retirement on the horizon. By that time, it’s often too late to build a comfortable nest egg in time for their projected retirement date. Instead, I encourage people of all ages, at all stages of their career, to regularly contribute to a retirement fund (or multiple). Even if you feel like you’re starting late, it’s important to have a plan in place and make proactive steps to start saving for retirement.
Some ways to save for retirement include contributing to an employer-sponsored 401(k), opening and contributing to an IRA, putting money into a ROTH IRA, or investing in mutual funds (talk to a trusted financial advisor to choose the financial plan that’s right for you).
No matter which resolution(s) you choose, it’s a great idea to start the new year with a financial plan. Commit to making positive financial choices and take action! By taking small steps now, you can make big strides in your financial well-being in the years to come.