What are financial new year resolutions?
Financial New Year Resolutions are essentially resolutions related to finance. People can set these goals as a way to create a plan for improving their financial situation over the course of the next year. Examples of goals could be saving money, reducing debt, increasing income, etc.
People have more control over their finances than they think. This is a great time to take control of their financial narrative to work towards financial goals they want to achieve.
This post is about financial new year resolutions.
1. Create a budget and stick to it
Did you fall off the wagon in 2022 due to unexpected events? Good news is, it’s never too late to create a budget and really stick to it. This is one of the best things you can do to assess and improve your financial wellbeing. It can help identify areas you can improve on, whether that’s cutting back on some expenses or saving more money. This exercise encourages you to reflect and ensure you are living within your means.
$10 here and there may not be a huge deal, but those daily lunches really add up. Again, the exercise of creating a budget helps you revisit your bank statements, see where there are areas of improvement, and create a system that allows you to live the life you want while maintaining good financial health. Check this post out for ways you can save.
2. Save more for emergencies
Life happens. All the time. You don’t have to feel bad about the financial repercussions of them. There’s only so much you can control; however, you can financially prepare to be in better situations so that you can afford the unexpected emergencies while not putting you in a really bad financial place.
Again, it is crucial to have a cushion in case of an unexpected emergency. This financial cushion allows you to have something to fall back on without breaking the bank. If you don’t already have one, you can make a goal to set aside money each month to fund your emergency bucket. For emergency funds, it’s recommended to place them in high yield savings due to their liquidity while providing the highest returns. Check this post out for some of the best places you can house your emergency fund.
3. Pay off debt
High-interest debt is to be prioritized as the top thing to pay off. The reasoning behind this is because whatever’s left on the high-interest debt is only going to keep compounding due to the interest charges. That’s why you want to knock this out as quickly as possible. The earlier you pay it off, the more money you can save.
4. Save for a specific financial goal: Make a plan
This is a great time to think about financial goals you want to achieve. You want to buy a car within the next few years? Make a plan. Check this post out for ways to make SMART financial goals you can achieve. Remember: you can afford to live the life you want, and having a clear financial plan can help you not only get there but it can help get you there faster.
5. Review and update your financial documents
It’s common to have changes in your personal life that impact your finances. Unfortunately, as stated in tip #2, life happens. But your finances don’t have to take a hit with them. Take this time to review and update financial documents (will, beneficiaries, power of attorney, etc). Again, these documents are in the case of an unexpected event, you want to be prepared. Especially if and when you’re not able to advocate for yourself.
6. Increase your income
Have financial goals you want to achieve faster? Want to buy a house in a high cost of living area? Well, when you’ve already cut back on your expenses, the other aspect to improve on is to increase your income. This could include asking for a raise, starting a side hustle, or jumping to a new job for a higher salary.
7. Improve your credit score
Credit score is one of the factors that impacts the ability to borrow money (via credit cards or loans). If your credit score isn’t where you’d ideally like it to be, this is a great time to improve it. Steps on improving your credit score include paying bills on time and in full. Another overlooked action is to check your credit report regularly. There could be mistakes on there, and if you don’t catch them/follow up on correcting them, nobody else will. You have to advocate for yourself.
To reiterate, the top 7 are:
- Create a budget and stick to it
- Save more for emergencies
- Pay off debt
- Save for a specific financial goal: Make a plan
- Review and update your financial documents
- Increase your income
- Improve your credit score
There you have it! 7 Crucial Financial New Year Resolutions. Granted, you don’t have to wait until the new year to make changes to improve your financial wellbeing. Interested in learning more ways to save? Check this post out for more money saving strategies!
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