The 13 Financial New Year's Resolutions - Carreira Finance - Financial Coach

Top 13 Financial New Year’s Resolutions

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The two most common resolutions for the New Year are going to the gym and starting a diet. Can you guess how many people are including financial New Year’s resolutions in their list?

In the U.S., out of all Americans that plan to have a resolutions list, only 27% of them plan to improve their finances.

When 78% of Americans live paycheck to paycheck, it is scary to see so many people that don’t plan to do anything about their finances this year.

3 Financial New Years Resolutions Statistics - Carreira Finance

Top 13 Financial New Year’s Resolutions

1 – How To Calculate Your Net Worth?

The New Year is a great time to assess your financial health. Calculating your net worth will give you a better picture of your current financial situation.

It will also help you to figure out what your next goals should be.

So your first step should be to make a list of all your assets and liabilities.

  • Assets are everything you own, such as cash, savings, investments, property value, or car value.
  • Liabilities are everything you owe, such as mortgage, credit card debt, personal loan, or student loan.

Then, subtract your liabilities to your assets to determine your net worth. Whether your net worth is positive or negative, your goal should be to improve your finances year over year.

2 – How To Review Your Credit Report?

Once per year, you have the right to review your credit report from all three credit bureaus for free.

There is a high probability for one of your credit reports to contain an error. As a result, it can cost you a lot of money on interest rates and insurance premiums.

That is why it is crucial to review all three of your credit reports.

You can also monitor your credit score by using free online services, but it won’t reflect your real credit reports.

However, you can use them to verify that any fluctuations in your credit score is tight to your actions.

3 – How To Create A Budget?

Creating a budget is one of the most popular financial New Year’s resolutions. But it is also one of the most difficult ones to stick with because it requires a lot of time and organization.

A budget can help you understand how much money is going in and out of your bank accounts.

Also, one of the great things about following a budget is that it allows you to redirect your spendings into the things you love doing.

For example, if you love going to the cinema, you can reduce your spendings in one of your other budget categories to allocate more money to the cinema category.

4 – How To Automate Your Savings?

We all know that we have to save money. However, do you know how much or how to do it?

Experts are suggesting that you save 10% of your income in a retirement account and have an emergency fund of 3 to 6 months worth of expenses.

The key is to automate your savings. We tend to spend more money when we see money in our bank account.

Thus, if you automatically save a certain amount of money directly after receiving your paycheck, you will learn to live without it.

For example, you can set up an automatic money transfer from your checking to your savings account of $500 each time you receive a payment.

5 – Why To Increase Your Retirement Contributions?

If you have the opportunity to contribute to a retirement account sponsored by your employer, take full advantage of it.

Think of it as additional income that you are leaving on the table if you don’t own a retirement account.

For example, let’s say you have a traditional 401(k) plan, and you make a 3% income contribution from your paycheck.

A great financial New Year’s resolution can be to increase your contributions to 6%.

As a result, you will save more money for your future, and you will reduce your taxable income for the year by 3%. It is a win-win.

6 – How To Pay Off Your Debt?

This year, focus on paying down your debt. Because if you have loans, it doesn’t matter how much money you save, you are losing money on your monthly interests.

If you want to know why and how to pay off your loans as quickly as possible, read our debt guide.

One of your financial New Year’s resolutions could be to pay off your loan that has a lower balance.

By lowering the number of credits you carry, it will keep you motivated to tackle the other ones.

7 – How To Improve Your Credit Score?

Did you know that you are paying more on your insurance premiums than people with a higher credit score than yours?

So this year, make sure to make the right decisions and actions to improve your credit score.

For example, you can call your lenders and negotiate a lower interest rate (APR), and a credit limit increase.

Write down on a piece of paper how many points you want your credit score to increase. Keep in mind that it doesn’t have to be a lot.

For example, even 20 points can make a huge difference.

8 – How To Build An Emergency Fund?

An emergency fund is money that you put aside to cover emergencies or unexpected expenses.

For example, if you have an issue on your roof, it can be pretty expensive, and you might not have enough money to repair it right away.

However, if you have a fully-funded emergency cash reserve, you won’t think twice about it.

According to the Federal Reserve, 39% of Americans won’t be able to pay an unexpected expense of $400. So, if you don’t have one yet, it’s time to open your emergency fund.

9 – How To Create An Investment Plan?

If you have more than one month of expenses in your checking or savings account, you are losing money.

For the last few years, the inflation rate is averaging 2% a year. In other words, if your capital is not growing by 2% a year, the purchasing power of your money is decreasing.

An investment plan takes into consideration a lot of different things.

For example, your risk-level, your portfolio diversification, your contribution cadence, and how much taxes you will have to pay.

But, the two most important things are your long term goals and your investment policy.

10 – How To Assess Your Employer Benefits?

Once a year, most employers make a few changes regarding the benefits offered to their employees.

Assessing those compensations from time to time can help you boost your finances.

Even after working a few years in the same company, you might be missing out on a couple of benefits.

Thus, talk to your manager, colleagues, or the HR department to identify all the perks that are available to you.

Then, depending on your current financial situation, you can figure out what is the best way to take advantage of them.

11 – Why Should You Never Make Late Payments?

Making your payments on time is one of the best financial New Year’s resolutions you can try this year.

It will increase your credit score, lower your stress, improve your organizational skills, and it is a good financial habit to have.

There are many things you can do to help you achieve this goal.

For example, you can set up automatic payments on your credit cards, or you can schedule a reminder a few days before your payments are due.

12 – How To Track Your Progress?

Only 9% of Americans are achieving their New Year’s resolutions.

If you don’t have a great way to plan and track your progress, you won’t stay motivated, and without motivation, you won’t push yourself enough to succeed.

So, what is the best way to stay motivated? Having someone to talk about it.

In other words, you need to keep yourself accountable by including a friend or a family member in your journey.

You will want to make progress before they ask you about an update on your goals.

You can have even better results if you can find someone that has similar goals as you.

13 – How To Get Professional Help?

The last financial New Year’s resolution that you can add to your list is to get professional help.

You might think that paying someone to help you improve your finances can seem counterintuitive, but it is worth it.

They will assess your current situation and determine what you can do to improve your finances significantly.

If you want to know more about what we offer our clients, visit our financial services page.

The 13 Financial New Years Resolutions - Carreira Finance
Most Popular Financial New Years Resolutions - Carreira Finance

Conclusion – Financial New Year’s Resolutions

In conclusion, there is a wide variety of financial New Year’s resolutions you can try this year.

However, keep in mind that your goal should be to achieve those resolutions. So, only selecting a few realistic financial goals will be easier to complete than having a lot of them.

The New Year allows us to start fresh. It is the perfect time to do everything that goes through your mind because our motivation will enable us to shuffle things around.

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