Financial resolutions are top of mind for most and for good reason in the New Year. It helps us envision a different and new beginning. With each new year, I set 12 goals that’s help me achieve small and big wins. In today’s article, I want to introduce you to 12 financial resolutions.
We have a family tradition of eating 12 grapes (doce uvas) at midnight when the clock strikes 12 on New Years Eve. It’s a Spanish tradition passed down in my family and one I haven’t broken. In fact, I’ve brought grapes with me at restaurants, nightclubs and at friends’ New Year’s Eve parties.
I was told eating 12 grapes would bring luck for the New Year. It was one grape for each month and through the years the tradition for luck morphed into making 12 wishes. As a kid, you could imagine my excitement to have twelve wishes. As I grew older and held onto my family tradition, I’ve used the symbolism of eating 12 grapes to think about 12 goals I plan to accomplish in the New Year. These goals which I often refer to in my commitment list range from making a phone call to an old friend, reading a book, learning a new skill and hitting financial milestones.
Looking at previous years, I realize the majority of my 12 wishes (in reality my goals) were realized. Last year, my goals were selling a home, help my parents move to Florida, self publish a book and nine additional goals I am fortunate to have been able to accomplish those goals this year. As I’ve become more self-aware I realize how important it is to set specific measurable goals. This has helped me identify what’s important. It keeps me focused in making the most out of my life.
Setting goals is one of the most important things you can do. If you don’t know what you want then how can you get it?
For the New Year, I was inspired by my family’s tradition of eating 12 grapes to encourage you to take 12 financial resolutions. Make the New Year the year you take control of your finances and live your dream lifestyle.
12 Financial Resolutions In The New Year
Calculate your net worth
Your most important number to determine your wealth is net worth. It’s what you have left after your assets (things you own of value) minus liabilities (things you owe). It’s the best indicator of financial wealth. Track your net worth in January, April, June, October. It’s simple to and you can start here.
Have a budget and track your spending
It’s much easier to determine the cost of your lifestyle for an entire year by using year-end statements from your paycheck, billing and financial statements. A budget can help you calculate your emergency fund amount, reallocate money towards debt payoff and other savings and investing goals. Learn how to start a budget that works. And use apps to help you track your spending more effectively.
Set up an emergency fund
The importance of having an emergency lessens your reliance on credit when an emergency happens. Have at least 6 months of expenses in your emergency fund to cover periods of unemployment or underemployment. Open an account and title it “Emergency Fund” set up automatic transfers. Start small then incrementally increase until you have the entire 6 months saved. I recommend my Emergency Fund Savings Strategy.
Simplify and automate your finances
Keep good records of your financial life. Automate your paycheck by choosing direct deposit and setting up automatic transfers into savings accounts. Opt-in for electronic statements when possible. Use online bill payment options and set up your bill payments in advance. The goal is for you to control your finances, not have your finances control your time.
Increase your 401(k) contribution by 1%
If you aren’t at the max contribution amount make the change and adjust your contribution a percentage or two for the New Year. The New Year is usually an indication you’re one year closer to retirement and the more you save now the better prepared you’ll be for retirement age. Not enrolled in your company’s 401(k)? Get enrolled immediately and contribute at least your company’s match amount. Learn how to retire well as a financial resolution.
Invest into a Roth IRA
That’s right once you’ve maxed your company’s retirement plan go ahead and contribute the max to a Roth. A Roth IRA is a retirement account where you pay taxes on money going into your account, and then all future withdrawals are tax-free provided you meet certain conditions. You can contribute up to $6,000 through a Roth. With apps like M1 Finance, Acorns and Stash, you can set up a Roth IRA with ease and set automatic contributions.
Check your credit report
Most people don’t bother to check their credit until they need to borrow money. Get in the habit of reviewing your credit at least once a year. Checking your credit in January can give you enough time to dispute inaccuracies and improve your score during peak home and car shopping months. Get your credit report through AnnualCreditReport.com. This is the only government mandated website to get your totally free credit report. To get your credit score, use a free credit monitoring app like Credit Karma or many others. Check the financial marketplace for other free credit score options.
Review your insurance coverage
Many things often change in the previous year. Insurance policies are typically one area that’s forgotten until it is needed. Review and update your insurance coverage especially if you’ve bought a new home, got married, had a baby or changed jobs. Review your health, homeowners, auto and life insurance policies. You may find better coverage with a lower cost. You can look at sites like Haven Life for your term life needs.
Update your beneficiaries
Many financial service companies like banks and insurance allow you to add a beneficiary. Take advantage of this feature and add/update the beneficiary in your retirement plans, insurance policies and savings accounts. Learn more about adding or updating your beneficiaries.
Start the Will process
Writing a will tends to be one that stays on the “to-do” list but is one of the most important financial documents. A will helps clarify what happens to your assets and can clear up confusion from divorcees and blended families. You can start the process simply and affordably through apps like Trust & Will.
Review your banking relationships
Financial institutions know how lazy we can be in switching banking relationships so they can get quite bold with fees and slip on service. The positive news is that you many options to get better rates and services with fewer fees. It’s just a matter of reviewing your current banking relationship and choosing a new bank or credit union that fits your need. Find a banking alternative in the marketplace.
Increase your worth
Be intentional with your personal and professional growth by improving your skills or learning a new one. Keep up to date with the latest in your profession and industry. There are many free resources from YouTube tutorials to Coursera workshops. You can also (and may be wise to pay) try Skillshare or Masterclass. Now, if money is tight, consider signing up for as many free workshops offered by many like The Budgetnista’s Live Richer Challenge.
I want to add that you can have financial resolutions anytime of the year, but I do find we can use the momentum of the New Year to start. The trick, however, is continuing on the journey. Set aside a day or 12 1-hour blocks spread into 12 days to tackle each one.