New Year, new you! Millions of people make New Year’s resolutions aimed at self-improvement, but what about financial resolutions? While most people don’t mention money as part of their plans for the New Year, financial management goals are just as important as weight loss or a promotion. Why? Over time, good financial habits can help you achieve goals like owning a home, being debt free or enjoying a comfortable retirement. Best of all, setting a financial resolution doesn’t have to be boring or difficult. Even small changes can make a big difference over time, so why not make the most of the next 12 months? We’ll show you how you can get started and keep going throughout the New Year.
Choose a financial resolution that fits your needs
Like any good New Year’s resolution, your money goals should consist of concrete, achievable steps that fit your lifestyle. It’s also important to make sure that your new financial management goal fits well with your overall personal finance plan. You may even wish to center your money goal on an area that needs improvement. No matter how you plan on improving your personal financial plan, there are some tried and true methods that can help you turn your resolutions into daily habits. Ask family and friends how they maintain their financial health, or reach out to a personal banker for advice on how to break big goals down into manageable steps.
While every financial resolution is based on a person’s unique circumstances, most fall under three basic groups – budget, debt and savings. The tips below can help guide you as you create your New Year’s money goals:
- Budget Resolutions: Budgeting should be the heart of any personal money management plan. When you know where your money is going, you’re better equipped to up your savings, pay down debt or reprioritize your spending. If you’ve never created a budget or want to revisit your current one, consider a budget-related financial resolution this year
- Even if you want to focus on another aspect of personal money management, it may be wise to review your budget before embarking on new money goals. Take a look at what you spend each month, including things like bills, loan payments, food, rent and other expenses. Next, see how much money you bring in and see what you have left over. You may uncover information that can help you reach a goal more quickly. Reviewing your budget could also uncover previously unknown issues with your personal finance plan
- Consider using an online tool or mobile app to assist you with personal money management. These tools can crunch numbers, analyze spending patterns and create simple reports to show you exactly where your money is going. Some online or mobile banking apps can also help you with budgeting, even sending alerts if you’re close to hitting your personal spending cap
- One common, budget-related financial management goal is to cut back on discretionary spending – that is, doing what you can to spend less on non-essential items or experiences. However, don’t take an all or nothing approach – if you try to eliminate every luxury purchase, you may be tempted to go on a spending spree later on. Instead, consider creating a “fun money“ account that you can draw on for entertainment or splurge purchases
- Debt Resolutions: Dealing with debt is never fun, but a smart personal finance plan can help you get control of, pay down or even eliminate your debt. Besides the obvious benefits, paying down debt can help you improve your credit score or improve your interest rate when applying for loans or mortgages. There are numerous ways of tackling debt depending on the dollar amount and debt type, but these are some general tips to help you with this aspect of personal money management.
- Paying down debt requires clear focus over a sustained period of time. To that end, make sure that debt resolutions (or any resolution) features a clearly defined goal with actionable steps. For example, you may aim to make your monthly payments on or ahead of schedule, or you could also make it a goal to pay down a percentage of your debt by a certain date. Be sure to keep track of your progress on a weekly or monthly basis using an app, a paper journal, or even by checking in with a financial mentor. It will help you stay accountable – and stay on track.
- If you have multiple debts or have trouble keeping up with payments, consider reaching out to an expert. Personal bankers or financial managers can help improve your personal money management skills, as well as helping you tackle your debt. Depending on your situation, they may recommend payment plans or debt consolidation as part of your overall financial strategy
- Debt isn’t just about payments – it’s also about improving or maintaining your credit score. A high credit score can help you get approved for loans and may also give you access to lower interest rates. If you don’t know your credit score or have never checked it before, make a financial resolution to check or monitor your score througout the year. One way to get started is by visiting annualcreditreport.com
- Savings Resolutions: Setting aside more cash is a popular money goal, but it can also be one of the most challenging. Some people lose sight of their savings goals when they want to make big purchases, while others aren’t sure how to prioritize the type of savings they should concentrate on first. Long term planning and a consistent approach makes all the difference, so be sure to think ahead and aim for a reasonable plan you can live with for a year or more.
- Before you start setting money aside, take a moment to review your financial management goals as they relate to savings. Are you trying to build an emergency fund, set aside money for a home or improve your retirement savings? Write down what you hope to accomplish by saving money, then prioritize accordingly. For example, you may choose to split your savings evenly among accounts, or put more money toward a particular savings goal
- It can be easy to forget about saving, especially if you use direct deposit and automatic bill pay. Fortunately, online banking makes it easy to set aside cash on a regular basis. Set up an automatic transfer from your checking account to your savings account on a weekly or monthly basis. Not only does this help you stay consistent, but moving extra money out of your checking account means you’re less likely to spend it
- If you need encouragement or accountability, consider doing a “savings challenge“ with a friend, family member, partner or spouse. Working with someone – either collaboratively or in friendly competition – can help you reach your money goals faster by encouraging you to save more. The two of you can also swap money making ideas and personal money management tips
Get expert help with your personal finance plan
Getting your finances in order is an important and worthwhile goal that will benefit you for years to come. Setting financial resolutions is one way to start, but it’s also good to work with a professional that can help you reach your financial management goals. A financial planner, certified public accountant or personal banker can help you make the right decisions for your needs and lifestyle. If you’re ready to pursue your money goals, visit your local bank today.
