Three Financial New Year's Resolutions You Should Make
Work out, quit smoking, eat better, travel more – these, along with “manage finances better,” are some of the most popular New Year’s resolutions. Coming up with your resolutions is the easy part but sticking to them is always a challenge. While some people might think New Year’s resolutions are pointless, there really are some that we would all be better off keeping – especially the ones regarding financial well-being. Here are three financial resolutions you can, and should, keep this year. These are sure to be a whole lot easier to follow than a strict new workout and diet regimen.
Establish an Emergency Fund
Answer this question: Do you have an emergency fund? Far too many people don’t, and they typically don’t have a good answer to the second question, either: Why not?
If you don’t have one, begin the new year by building your emergency savings fund of $1,000. It’s okay to start out saving with what you can afford, even if it’s small amounts. Ideally, you want to work towards having six months of living expenses in some type of account that allows you to withdraw at any time without penalties. This will help if you encounter anything from car trouble to a medical emergency.
Look for accounts that make your money work harder for you by paying higher interest rates. A Money Market account typically earns more than a basic savings account. Or a High Interest Savings account earns you a higher interest rate than a basic saving account.
Make a Game Plan for Your Debt
Once you’ve established an emergency fund, it’s time to take note of your debts. Whether it’s credit card debt, student loans, auto loan or medical bills – your debt won’t get any smaller by ignoring it. Look for ways to pay it off faster buy reducing excess spending and applying those funds to your debt. Try cutting cable and streaming services or restricting your nights out on the town. Small changes to your lifestyle, and the money you save by making these tweaks, can make a huge difference in the amount of interest you ultimately pay over the life of your loans. If you can challenge yourself to shake up your routine now and cut back where you can, you’ll be thanking yourself in a year’s time.
Seek Third Party Advice
Start the year by meeting with a Wealth Advisor or a Financial Well-Being Coach. At minimum, a yearly meeting to make sure you’re on track with your finances is a must.
A Wealth Advisor is someone to guide you through your short- and long-term plans to strengthen your financial health especially when it comes to retirement and investments. If you have never met with a Wealth Advisor, it is never too late to start.
A Financial Well-Being Coach offers free one-on-one sessions with expert guidance to address your specific circumstances and financial goals. You will learn how to budget, improve your credit score, manage debt, save for a home and create a customized life plan to help you achieve financial peace of mind.
Making financial New Year’s resolutions is crucial as it sets the tone for your financial health in the upcoming year. It encourages you to evaluate your current financial situation, identify areas of improvement and set realistic goals. Whether you focus on one or all three New Year’s Resolutions we recommend, these resolutions can guide your financial decisions and behaviors throughout the year.
