December 21, 2022 | by Team Wellby
New Year, New You. Resolutions to Build Your Financial Well-being
December 29, 2022
By Travis Sink
A new year is an opportunity to reflect on your finances and the goals you want to achieve in the upcoming year. Now is a great time for proper financial planning to help you reach those objectives and prepare for expected and unexpected financial changes.
After reviewing the past year's finances, you can evaluate and adapt your spending and saving habits to improve your budget, prepare for your next big purchase, or look to grow your overall savings or investments.
- Start by understanding your financial goals and creating an action plan for obtaining them.
- Establish a budget to ensure you are spending within your means while saving enough to meet your new goals.
- Learn and implement better money habits to start the new year on the right foot and make reaching your monthly goals more obtainable
A few simple New Year's resolutions can set you on the right track to a healthier financial future. Look at this New Year as an opportunity to create positive change in your finances and well-being. Here are some resolutions to help you achieve financial success this new year.
Create or Adjust Your Existing Budget
One of the best steps toward financial security is creating budgets and making financial plan adjustments. If you already have a budget in place, now is the perfect time to reevaluate and determine how well you stuck to your budget in the past year.
Start by tracking your monthly income and expenses and determine how much you can save or have saved in comparison to your goal. Make sure also to track your expenses to see areas where you can cut back, like entertainment or eating out.
You should also evaluate monthly payments going toward debt, like loans or credit cards. Maybe it's time to look into refinancing a loan to a lower rate or consolidating your debt to pay it off sooner or lower your monthly payments.
Additionally, you'll want to check if your expected spending is going to change in the near year and adjust accordingly. This can include changes in income, increased rent prices, and even gas price fluctuations if you commute.
Last but certainly not least, you'll want to create a savings plan for specific goals, such as a vacation or a new car, to help you build up your savings until you reach them. All these steps will help you understand your financial situation better and help you make more reasonable decisions in the future.
Budget For Your Emergency Fund
Unexpected expenses can pop up at any time, and if you don't have a rainy-day fund to fall back on, you may find yourself in an unfortunate position. If you don't have one, building one into your savings goal for your next year's budget is an easy way to get started. This will allow you to allocate a small number of funds toward building your emergency savings.
If your new budget allows, you can start by opening a basic savings account and putting a little money aside to save enough to cover three to six months of living expenses. This can help you avoid dipping into the savings your putting aside for big purchases or taking out a loan in case of an emergency.
Having an emergency fund is a goal that every family should consider, even if it's just a few dollars per paycheck. Something to fall back on in case an emergency or unexpected expense pops up throughout the year. It will support you as you navigate challenging times and provide some peace of mind knowing that you have a cushion for emergencies.
Pay Off Debts (If Possible)
Now that we've discussed your plans, it's time to review your current debt levels and take action, if possible. One of the best ways to ensure a successful financial future and free up funds to improve your budget is to get rid of any debts you may have or utilize tools to reduce your monthly cost.
Start the new year off right by paying off any debts you may have. If you have high-interest debt, such as a credit card, it is best to pay it off as quickly as possible by doubling payments if you have the budget available. Moreover, think about combining your debts into a low-interest debt consolidation loan. In the long run, it can help you save money and could lower your monthly payments by reducing the amount going toward interest every month.
Every little bit helps, and how they add up will surprise you. As you evaluate your budget and determine how much extra you have at the end of the month, your ability to pay off your obligations can be more than you realize. Update your financial plan and stick to it to build your financial well-being in the new year.
Reevaluate Retirement Savings
If you haven't already started, planning your budget is a great time to consider saving for retirement. Take this new year as a sign that it's time to reevaluate your retirement investments. Many companies reevaluate their benefits at the start of a new year, and new opportunities to invest in a 401k may be available and should be considered when budgeting your paycheck.
You don't have to sock away a ton of money each month. Even if you can only budget a small amount each month, consistent contributions can make a big difference over time. Figure out what works best for you and your budget, and get started on the path toward financial security in your golden years.
Better Money Habits for the New Financial You
With the New Year comes a chance for a fresh start and to set yourself up for financial success. There are many great ways to start incorporating better money habits into your life to help you stay out of debt, grow your savings, and even improve your credit score. Utilizing some of the tips we've discussed on how to improve your credit score can set you up for success in the new year.
In short, it's best to keep track of your income and expenses while reviewing your credit every few months to stay on top of any changes or discrepancies. Additionally, unless necessary, it's wise to avoid opening new lines of credit. New lines of credit can lead to rash decisions that can affect your finances long-term by increasing the risk of over-leveraging yourself.
Track monthly purchases to identify your spending patterns so you can make adjustments where needed. Review your purchases at the end of each month and compare them to your budget.
Remember, just because you set a budget doesn't mean you can't adapt it throughout the year to your changing circumstances. So while today is a great day to start, keeping up and adjusting your budget to flow with your changing finances throughout the year can help cut down on surprises come next new year!
Travis Sink is an Ohio native who flew south for the winter in 2014 and never went back. An avid consumer of all things from the tech and financial industries by day, he spends his evenings relaxing with his wife and dogs either reading, playing sports for local rec-leagues, or learning how not to burn dinner again.
Related articles you might like
December 5, 2022 | by Travis Sink
8 Tips For Smarter And Safer Online Shopping During The Holidays
November 23, 2022 | by Travis Sink