With the new year quickly approaching, most of us are thinking of ways we can do better than we did last year. Making plans to exercise more, read more, or just simply enjoy life more often! But, have you thought about what you’re going to do financially this coming new year? I certainly have! Here are some financial resolutions to help you start your new year off right!
Financial Resolutions – An Absolute Must!
Resolutions are meant to set a roadmap of sorts of what you’d really like to accomplish in the upcoming year. Financial resolutions can help you really take control of your finances and meet your goals. Below you’ll find some of the financial resolutions I’ve used (and still use) to set some financial goals going into the new year.
1) Start an Emergency Fund
Starting an emergency fund can be a great resolution for the new year, especially if you don’t already have one in place.
- losing your job
- house appliance (stove, fridge, washer, etc.) goes out
- medical/dental expenses
Since this fund is for emergencies, make sure the money isn’t tied to some long-term investment. Because yikes, you could lose a bunch of it at any given time! And, if you need it at the drop of a dime, it won’t do you any good tied to your investment account.
How much money you should contribute to build up your emergency fund is completely based on your budget.
- How much can you afford to put up for a rainy day?
- Are you going to put it up in a lump sum and leave it?
- Or will you add a hefty amount to start and add money each week? Maybe each month?
These are important questions to ask yourself when thinking of building your emergency fund.
2) Automate Savings
Automating funds to your savings can really help it grow.
Whether you are saving for a:
- college fund
- new home
- new car
- business acquisition
Whatever you are trying to save for in the future, automating your savings can help you get there quicker.
The most beneficial thing about automating your savings is that you don’t even have to think about the money that is being transferred. It just happens automatically!
I enjoy my automated savings. I make my money and as it hits my account, and my savings are automatically subtracted before I even know the money has posted. It helps because I don’t have to do much except let it happen and watch my savings grow. In the last year, I’ve been able to save up $5k for my emergency fund! It came in handy during the shutdown which is all the more reason I am a huge advocate for automating your savings.
3) Create or Analyze Your Budget
If you are serious about getting your finances in order, MAKE SURE YOU START WITH YOUR BUDGET! You’ll need a budget to compare your spending and debt plan to so that you can make effective changes in your financial plan.
If you don’t already have a budget in place to analyze, start creating your budget now.
If you’re like me, you may have had a budget all year (or for at least most of it). That’s great! So, it’s time to start analyzing that budget for a new year.
Whether you’re analyzing your personal or business budget, understand the entire point of the budget analysis is to find extra money in the budget.
How do you do that?
- Analyze your spending
- Compare your projected expenses to your actual expenses
- Check the areas where you’re overspending and cut it
Sound simple enough right? Well, it actually is! Once you’ve gone through those steps you should be able to find some extra money and get your spending plan in order.
Create a Monthly Spending Plan
After you’ve analyzed your budget and figured out where to cut back on spending, come up with a spending plan to go along with it. With a spending plan you can detail your projected expenses and track your spending. When you can actually see what you’re spending your money on, you try harder to stick to the plan.
4) Find a Better Way to Manage Your Debt
If you have a lot of debt, now is the best time for you to take a look at it and hunker down.
The first step to managing your debt is by taking a look at your credit. If you’re ready to tackle that debt in the new year, you’ll need to know your credit score. When you know where you’re at, you’ll get a greater sense of where you need to go.
If you’ve already analyzed the budget and created the spending plan, getting your debt management plan together should be a little easier. Now, you’re taking a look at that debt. Figure out how much you owe and to whom so you can tackle it head on.
- the debt snowball method (pay off the smallest balances first)
- the debt avalanche method (pay off balances on the highest interest rate accounts first)
You can also use debt management apps like:
Each debt management app is different. Some can help you focus on a specific debt to tackle or the debt as a whole. However you choose to manage your debt is completely up to you. But it’s great to make sure you have a debt management plan in place to stick to.
5) Negotiate or Cancel Your Subscriptions
If you’re looking to make a great change with your financial resolutions, take care of those subscriptions. When checking your budget, subscriptions should have been one of the first things to look at because it’ll be the first thing that you can afford to cut.
If you think you can negotiate it down, do so! It doesn’t take much but a phone call and more often than not, you could get your payments lowered or get a discount offered (I just did it today with my internet). The best way to know if it needs to be cut is to ask yourself, “Can you get the price lowered?” If not, do you really need it?
6) Automate Bill Payments
- You have your budget.
- You know what you need to spend.
- And, you’ve calculated your debt and figured out how to tackle it.
Now what do you do?
Pay your bills of course!
The best way to take care of all these payments without all the hassle and stress is to automate your payments.
Just like your savings, automation can really be helpful because you don’t have to think about the payments.
- No need to remember the payments as long as you know what is coming out and when, you know what to expect.
- No surprises.
- Just make sure the money is there so the payment can be made!
This one is important!
Hopefully you’ve been keeping track of your cash flow and staying organized all year.
Whether you work as a freelancer, had a full-time job, multiple jobs, or got laid off, make sure you have your financial affairs in order just in case.
Also, make sure you know the important dates for the upcoming tax season (be prepared for any changes!)
8) Create Multiple Streams of Income
In order to reach your goal for your financial resolutions, multiple income streams is a must.
This past year has shown that you need to be prepared for anything that comes your way. This means you need to create multiple streams of income for yourself, and be better prepared for anything while you have extra income coming in.
You can create different streams of income by:
- getting another job
- starting a business
- investing in dividend stocks
- writing an ebook
- renting out your home (or a room)
- creating an app
- investing in rental properties
All great options, but there are so many other ways for you to create other streams of income for yourself.
9) Grow Your Money Through Better Investments
What did you invest your money in this year?
Do you have a stock portfolio?
Have you contacted an investment professional to see if you’re really doing it right?
If you did not have a diverse investment portfolio this year, make sure next year you make time to correct that.
When you find extra money in your budget that can help you build wealth, use it for just that. If necessary, contact a professional to make sure you’re getting the most out of your investments.
Related: Where to Invest Your Money in 2021
Estate planning can tend to make some people cringe.
Especially with everything that happened this past year!
If you haven’t considered getting your estate in order, you probably should.
- Are you married?
- Do you have children?
- Run a business?
Well you should definitely plan what to do with your estate after you’re gone so everything is handled the way you would like it to be.
Make sure to consider the needs of your family after you’re gone.
Do you have life insurance? If not, you should consider getting it now (We partner with Bestow as an affiliate).
Get your directives in order and designate all your beneficiaries. Contact a professional if you’re completely lost. There’s nothing wrong with admitting you need help in this area, you simply want to make sure everything is in order so there are no issues later on down the line.
Kick Your Finances in to Gear TODAY!
Being financially prepared for the upcoming new year is important. Anything can happen but you are better prepared to deal with it head on when there’s a plan in place. Hence, financial resolutions!
Hopefully, these resolutions can help you set up for a GREAT new year.
Do you have any financial resolutions that have helped you in the past? Have any of these helped kick your new year into gear financially?
AUTHOR LaTia Longuemire
My name is LaTia Longuemire. I enjoy writing, singing, and cooking in my spare time. My passion is helping others. At this stage in my lifetime, I'm primarily focused on my children. They are everything that keeps my world spinning.