According to a survey by U.S. News and World Report, up to 80% of people abandon their New Year’s resolution by February. Hoards of enthusiastic resolutioners flock to gyms, bookstores, and wherever else their sweet intentions sent them in the hopes of making their New Year different. Yet more often than not, they’re left with disappointment and a lack of real change.
Now 2022 is right around the corner and we’re getting ready to start the cycle of resolutions all over again. Rising inflation, unsteady employment rates, and COVID-19 fears have driven more people to save and invest than ever before. Capitalize on the momentum and get your finances in order.
Let’s make (and keep) our New Year’s resolution by focusing on financial resolutions. I spoke to 10 financial experts. Keep reading to get their insights on the top financial resolutions for you to make a difference in your financial well-being and success.
Align Your Finances With Your Core Values
Bill O’Donnell, a Certified Financial Fiduciary, from Heartland Financial Solutions says to align your finances with your core values. He says that you’ll never be satisfied with how much you have. No matter how much it is. We’ll always want more.
However, if you align your money and core values, you’ll tend to control impulse spending and buy things that bring value to your life. He says to ask yourself this one question, how will this purchase satisfy my core values? If you don’t have a simple answer, you might want to wait before making a purchase.
Start a Budget
Justin Nabity, a Certified Financial Planner, from Physicians Thrive says to create a personal budget. Make a resolution to track your spending to better understand where your money is going and how to plan for future expenses.
Set goals and be realistic. If you’re spending more than you bring in, look for ways to cut back or increase your income. Make sure your budget includes your income, expenses, and money for saving/investing. Set up a sinking fund to help plan for big purchases or vacations. And be sure to check-in with your budget on a regular basis for a successful resolution.
Cut Unnecessary Subscriptions
Nick Bormann, a Certified Financial Planner, from Bormann Wealth Management, LLC says to save more money. He recommends that you review all of your subscription services this New Year. Do they provide you with value? Are there lower-cost options?
Cutting subscription costs can jumpstart your savings or debt repayment plans. All of these extra savings can be redirected to savings, investing, or paying down debt. Reducing costs is one way to increase the amount of money you have and it doesn’t take any extra willpower. Now that you’ve cut the subscription, keep the resolution by not purchasing new ones that you don’t need.
Pay Off Debt
Matthew T. Gray, a Certified Financial Planner and Advisor at Personal Capital recommends paying off bad debt. He says that it “helps your finances become leaner and more energized.” He recommends paying down debt like high-interest credit cards, personal loans for discretionary purchases, and payday loans in a systematic way with the avalanche debt payoff method or the debt snowball method.
With the avalanche method, you pay off the highest interest rate debts first and then work your way down to the lowest-rate debts. With the snowball method you pay off the smallest loans first, take the money you were paying on that loan to pay down the next smallest loan.
Negotiate Your Way Into a Lower Monthly Overhead
If you don’t ask, the answer is always no. Eighty percent of people don’t negotiate and they’re poorer for it. Make this year different.
Mark Chen, the founder and CEO of Get Bills Smart says to “lower your monthly bills (credit card, phone, cable, [and] internet bills).” You can negotiate lower rates on your phone and cable bills. Try calling your credit card company to negotiate a lower interest rate to save money. Every dollar that doesn’t go to your service provider or credit card company is a dollar that goes towards you, your loved ones, and your priorities.
Finally, Create That Emergency Fund
If 2021 taught us anything it’s that those emergencies actually happen. People lose their jobs, healthcare bills pile up, the car breaks down. Fewer than 75% of Americans have a six-month emergency fund. Make 2022 the year you finally start your emergency fund and vow to work towards having six months of expenses saved.
Bobbie LaFollette of Sowing the Seeds of Wealth recommends building an emergency fund of $1,000. He says that setting aside a little money every week can reduce stress and financial strain when something unexpected comes up. LaFollette says “automating this process with an auto-transfer to a savings account right after you get paid can help turn this into a lasting habit.”
Start Investing or Increase Your Contributions
Investing is a great way to build wealth. Michael Dinich of Wealth of Geeks says to create a new year’s resolution to start investing (or increase your contributions) every month. Put time and your money to work for you with dollar-cost averaging by establishing a regular contribution cycle.
Make a resolution to get the most from your 401k employer match or your Roth IRA. If your employer matches up to 3%, strive to contribute 3%. If you’re investing in a Roth IRA, make a plan to max your contributions for the tax year (if you’re eligible).
Either way, learn to pay yourself first in your budget and set up automatic transfers to your brokerage account. This will hold you accountable and ensure that you prioritize investing for your future.
Check Your Investments Less Often
Emotional responses to market changes and investments can hurt investors. John Stoj, a financial planner with Verbatim Financial says to “check your investments less often. The less most people touch their investments, the better their long-term performance.” Automate and forget about it. A strategy you won’t have to think about.
Increase Your Personal Finance Knowledge
The first step to building wealth is to increase your financial literacy. Jacqueline from Mom Money Map says to read a new personal finance book quarterly. Make reading a little everyday habit. If you don’t think you can fit this into your hectic schedule, download personal finance podcasts onto your phone and listen during your commute or walking your dog.
Set a daily goal and a time to read to keep you on track. You’ll get a new perspective on wealth with each new book.
Start a Side Hustle
Clayton Wood, a Certified Financial Planner, at Wood Financial, LLC says to start a side hustle. “A side hustle is a great way to increase your income or replace income in retirement. We find that most people feel that there is a high barrier to entry to start a side hustle, like real estate property investing, but nowadays there are many low-cost ways of earning an extra $500 per month.”
If you set a realistic goal of earning $500 per month, you’ll have an additional $6K in income this year. Just make sure you find something that interests you. You have lots of options.
Start 2022 Strong
There you have it. The top financial resolutions for 2022 to kickstart your New Year. Be creative and honest when you’re working on your goals. What do you really want to achieve? Why? What’s feasible given your current situation? Can you share your goals with someone else to stay accountable?
There’s no better time than the new year to inspire change through resolutions. Do what you have to do to make your financial resolutions a new habit that you continue for years to come. Use them to reduce your money worries and build wealth.
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This article was produced and syndicated by Wealth of Geeks.
Featured Image Credit: Freepik.