Tis the season for New Year’s resolutions. But as you think about weight loss goals and vow to hit the gym 5 days a week, it’s also important to make resolutions for financial fitness.
If you’re not happy with your current financial picture, there are simple resolutions you can make to change your situation. Here are 5 that you can stick to for the coming year.
1. Increase Savings Each Month
Savings goals are a popular target for New Year’s resolutions. But instead of committing to saving a certain amount, how about committing to increasing savings each month?
For example, if you’re currently contributing 1% to your company’s 401(k), resolve to bump up your contribution by a fraction of a percent each month, so you end the year closer to 3 or 4%. Likewise, if you’re saving toward an emergency fund, try to increase contributions by $5 each month. Small increases can have a big impact on savings, plus you’ll hardly notice them as they happen.
2. Get Insurance Protection in Place
Find a time to sit down and review your current financial situation in terms of:
- Health insurance: Many companies hold their Open Enrollment period toward the end of the year where you can freely make changes to benefits. That means it’s important to compare health plans to choose those with the best protection for your family at the most reasonable rate.
- Home and auto insurance: If you’ve used the same companies for years, it may be time to shop around for better rates. Then, you can use any savings to further other financial goals.
- Life insurance: If you don’t yet have a term life insurance policy in place, the New Year is a great time to get one. Term life insurance is an inexpensive way to provide financial protection to loved ones if something unexpected happens to you. If you’re interested in life insurance as a more holistic financial product, consider permanent life insurance as an alternative.
3. Check Your Credit Report Regularly
Many people would like to have a better credit score, and that starts with your credit report. But be honest, when was the last time you checked it?
You can access your credit report free once each year from the three major credit reporting bureaus: Experian, Equifax, and TransUnion. Doing so can help you identify errors or mistakes before they hurt your score. Check one report now, then set up calendar reminders to check the others later this year.
4. Make a Plan to Become Debt-Free
A New Year’s resolution to get out of debt completely is often unreachable. In turn, it can lead to giving up on debt repayment entirely or even accruing more debt. That’s why a better resolution is to create a debt repayment plan.
A great debt repayment plan outlines your existing debt, including how much you owe and the interest rate. It also outlines the strategy you’ll use to pay it off, like the debt snowball or debt avalanche.
5. Track Your Expenses
Hitting the ground running with a budget in the New Year can be tough to stick with. Instead, commit to being more mindful of spending and track your expenses throughout the year. That way, when the time comes to create a budget, you’ll already know where your money is going and where you may have opportunities to save.
The Bottom Line
Most people who make New Year’s resolutions don’t stick with them. That’s why it’s important to choose realistic financial resolutions you can achieve without completely uprooting your life. Simple financial New Year’s resolutions like increasing savings, assessing insurance, checking your credit report, creating a plan to become debt-free, and tracking expenses can go a long way in creating a foundation of financial wellness that truly sets you up for financial success next year.