Are you planning to improve any aspects of your financial life for the new year? Do yourself a favor and pick no more than a few things to focus on at the start. Additionally, make them very specific and achievable. Don’t set yourself up for failure! Once you’ve identified your financial resolutions, physically write them down and put them up in a place you’ll see them daily – maybe the bathroom mirror or fridge. Pull in an accountability partner too, if you really want to see yourself follow through.
Looking for some ideas to get the wheels spinning?
Get a True Handle on Spending
It’s hard to know what you can do, if you’re not totally sure about what you have to work with. Most people can easily say what they bring in, but have a harder time nailing down exactly what goes out. And if one of your other resolutions is to increase savings, this is where it all starts! There’s a slew of helpful apps out there that essentially do this for you, or you can always take up the old-fashioned method of reviewing bank and credit card statements at the end of each month. In the process, you may even discover “forgotten” expenses or more easily identify opportunities for reducing expenses.
Pick Expenses to Reduce or Eliminate
For some things, this can really be done rather easily. Sure, it might involve a sacrifice, but it’s doable. Maybe this means brewing coffee at home instead of stopping by Starbucks. Packing a lunch and cooking at home more, in general, can go a long way. You might consider free alternatives to the gym or pricey workout classes. These are only ideas and there are plenty more opportunities. Whatever it ends up being, see if you can find even one expense to reduce or eliminate.
Boost Your Emergency Fund
The importance of an emergency fund can’t be understated – especially after a year like 2020. Ideally, a cash reserve would be enough to cover at least 3 to 6 months of necessary expenses. If you’re not quite there, make this a top priority going into the new year.
Face Debt Reduction Head On
Do you have the ability to put extra money towards credit card payments or other liabilities? If so, this is a sure way to save on interest costs over the long run. Analyze any debt load and determine the best strategy for paying them down.
Automate, Automate, Automate!
Do this for contributions to your savings account. Do this for credit cards or other debt payments. Do this for any personal retirement or investment accounts you may have outside of your employer. Do this to take the thinking out of the process and increase the chances you reach your goals. Do this!
Increase Retirement Savings
Could you increase your 401(k) contributions by 1%? Are you getting the full match if there is one? Is it possible to max out your workplace plan or any IRA? Even small, steady increases through the years have the potential to do a lot for your overall retirement nest egg. Don’t delay on making these moves if you can. Familiarize yourself with retirement plan rules and limits .
Get a Free Credit Report
Not only is it helpful to know your credit score, but there might also be corrections needed on your report that could result in a higher number if addressed. Everyone is able to get one free report a year from each of these 3 agencies: Experian, Equifax, and TransUnion. Once you’ve checked your score and reviewed the report for any possible corrections, identify strategies to build your score up.
Review Insurances & Think About Re-Shopping
Your need for various coverages is likely to change as the years go by. Be sure that what you have in place reflects that. Insurances such as auto and homeowners are good to re-shop on a regular basis as well. If you haven’t done this in a few years, you might be able to find savings for appropriate coverage with another carrier.
Double Check All Beneficiaries
This is one of those elements that often gets overlooked. Make sure the beneficiaries listed on any accounts or policies are consistent with your current wishes. If you don’t already have any listed, consider adding a secondary beneficiary(ies).
Organize Your Financial Documents
This has the potential to be a bear of a task if it’s never been done before, but you’ll be glad you did. Here’s a guide to getting financially organized if this one makes it on your list of resolutions.
Build a Professional Team
If you’ve gotten to the point of needing or wanting advice around your financial planning, take the step to recruit your team. In a perfect world, this would consist of a financial planner, tax advisor, and attorney. Be careful to ensure each one is a good fit for you and expect each professional to be willing to work together with your best interest in mind.
Financial planning is an organic journey and getting to your ideal place takes time. Don’t get discouraged when it doesn’t happen overnight and take the time to recognize any progress made in just one year. Commit to one or some of these ideas above and reflect on any achievements 12 months from now.
Edward F. Jurgielewicz III
President
