Personal Finance New Year’s Resolutions
The new year is such an exciting time, full of possibilities. It’s a time to reflect and a time to start fresh on whatever changes you want to make in your life. You can leave the failures and disappointments of the past year behind and dream about the possibilities of the future.
Personal finance is a popular area for New Year’s resolutions. According to a study by YouGov, 49% of Americans making New Year’s resolutions in 2020 made saving money a priority. 30% said they wanted to stick to a budget.
It makes sense that finances are a popular category for New Year’s resolutions.
Most of us never had any instruction on how to manage money. Even if you know what you’re supposed to do, emotions and complicated relationships with money often derail us from our goals. Besides that, it’s so hard to sort through all the advice out there and find what is right for you.
So to help you transform your finances in the New Year, here are some ideas for the perfect personal finance resolutions.
Start contributing to a retirement account
Identify where you will save. Start by finding out what your options are through your employer. Or start with a Roth IRA, traditional IRA, or other retirement plan for the self-employed.
Decide how much you will save. A common recommendation is to contribute 10-15% of your pre-tax income, but any amount is better than nothing. Start with what you can and work to increase it over time.
Make it automatic. Set up automatic deferrals from your paycheck into your retirement account so that you never have to think about it.
See also: 401k Tips for Maximizing Your Retirement Savings
2. Increase the amount you save for retirement
If you already contribute to a retirement account, challenge yourself to increase the amount. Once you’ve maxed out workplace retirement plans, consider a traditional or Roth IRA to supplement your retirement savings.
3. Invest
If you don’t invest the money, it won’t grow and you risk not having enough money in the future. Money that’s not invested actually loses value over time due to inflation. Keep a healthy amount of savings in a high yield savings account so that you can access it if needed. After that, work with an investment advisor or use the tools offered by your brokerage company to invest the money in a way that’s right for you.
See also: Women are Investors Too
4. Automate your finances
Setting up automatic bill pay, retirement contributions, and transfers to savings accounts is the best way to make sure it happens and will save you a lot of time and mental energy.
Learn more: Why You Should Automate Your Finances
5. Track your spending and eliminate or reduce things you don’t use or that don’t bring you joy
All good financial management depends on knowing where your money went. Use an app or sign up to get my free budgeting spreadsheet template to start tracking your money today.
If you’re struggling to make ends meet, look for ways to reduce expenses. Try going through your credit card or bank statement and highlight purchases you’ve made that don’t make you feel good. Make a plan to work on reducing those expenses.
Could you shop at a store with lower prices?
Could you switch to store brands?
Could you negotiate a lower rate on your cable, internet, phone, etc?
Could you refinance your mortgage or move to a less expensive place?
Could you cut any subscriptions or memberships that you don’t use much?
See also:
6. Make more money
15 years ago, if you had told me to ask for a raise, I would have looked at you like you were crazy. Fear and doubt would have crept in. I would have wanted a raise of course, but the idea of actually asking would have been terrifying.
But if there’s one thing I’ve observed through talking to people about their financial struggles, it’s that sometimes we just need more money. It’s impossible to coupon your way to financial stability when your income just doesn’t cut it.
So this year, consider how you can make more money. So many people have amazing resources for tips and scripts you can use to ask for a raise or negotiate a job offer. Google it and start preparing today!
7. Get out of debt
Debt can be stressful, especially if it is high-interest credit card debt or student loans. Now is a great time to take stock of your debt and make a plan.
Check out these resources to help you get started:
Watch my video that explains what is happening with Student Loans and Public Service Loan Forgiveness (as of end of 2021).
Learn how to lower your student loan payments and make them more affordable.
Get my free Debt Rescue Pack with worksheets and tips on how to finally make progress on your credit card debt.
8. Build an emergency fund or a financial cushion
If 2020 and 2021 taught us anything, it’s that an “oh crap” fund to protect you from job loss and other catastrophes is critical to financial security.
Learn more: Why You Need an Emergency Fund
9. Identify other financial goals and make a plan to save for them
Vacation
New home or home renovations
Anything else (even if it is just a “latte” fund)
Learn more:
10. Schedule regular money dates with your partner
Communication is key to managing money with a partner. Checking in on a regular basis to go over expenses for the week/month and talking about larger goals will help keep you on the same page. Put it in the calendar and make it fun with an adventure, a bottle of wine, or your takeout from your favorite restaurant.
11. Make sure you’re protected with the right insurance
Make a plan to meet with an insurance agent to get an appropriate amount of home/auto, disability, and term life insurance.
12. Do your estate planning
No, it’s not just for rich old people. Every single person needs a will, power of attorney, healthcare directive, healthcare proxy, and the right beneficiary designations.
Meet with an estate planning attorney to develop the right plan for you.
Check your beneficiary designations to make sure they’re up to date.
Learn more: Estate Planning Essentials
13. Learn
Make a commitment to your financial education this year, whether it’s through signing up for my newsletter, following me on social media, reading a personal finance book, or something else. Invest in yourself this year so that you can take more control of your finances and feel more confident in managing your money.
14. Advocate
Many people fall through the cracks of our social safety net and could really benefit from having others speak up and advocate for things like more affordable housing, access to affordable healthcare, a higher minimum wage, and more sick and family leave.
15. Give
Is there a cause that is important to you? Now is a great time to figure out how you can support that cause by donating money or volunteering.
