6 Financial Resolutions for the New Year

As the calendar turns to a new year, it's the perfect time to hit the reset button and set your sights on fresh goals. While you might be eager to hit the gym, eat healthier or pick up a new hobby, don't forget about those all-important financial aspirations. This year, take a fresh look at your financial goals and plans to ensure they align with your long-term vision and help you build a stronger financial future.

Whatever your financial goals are, the first step is getting started. To help you start and stay on track, we've compiled a list of practical financial resolutions to guide you towards developing and maintaining healthy money habits all year round.

Financial Resolutions to Incorporate This Year

1. Create a financial plan 

A financial plan helps you stay on track to achieve both short- and long-term financial success by effectively managing your income and assets. By setting clear financial goals and managing your resources effectively, you can achieve greater peace of mind and establish long-term security.

How to start: Begin by writing down your financial goals. Schedule time with a financial advisor to help you create a comprehensive roadmap. They can help you articulate your objectives and guide you through important questions you may not have thought about.

Stay on track: Regularly review your financial plan with a financial advisor at least once a year. For more complex plans, consider more frequent meetings to ensure you stay aligned with your goals.

Tip: Create a personal financial statement that details your net worth, including all assets and liabilities such as real estate and property. Keep this statement in an accessible place and review it monthly. Track your progress year-over-year and take pride in the growth of your net worth.

2. Create a budget

Creating and following a budget is often one of the first steps to achieving your financial goals. A budget ensures you have enough money to cover essential expenses and allows you to allocate funds for items important to you and your family.

How to start: Begin by tracking your monthly spending habits using an app or spreadsheet and follow the 50/30/20 budgeting method. List your after-tax income and all living expenses. Fixed expenses typically include rent or mortgage payments, utilities and groceries, while variable expenses might cover non-essential subscriptions and entertainment. Once you've identified your needs versus wants, evaluate where you can cut back on expenses. Calculate the remaining money to allocate towards long-term savings goals. If your expenses exceed your income, make the necessary adjustments to balance your budget.

Stay on track: Revisit your budget at least quarterly, preferably monthly as you begin. Digital banking tools like MyFinance Manager in MyJFG can simplify the process by categorizing your spending and highlighting areas that need attention. Regularly reviewing your finances helps you stay accountable to your plan and can prevent you from straying from your budget.

3. Pay off debt

Debt can be a powerful financial tool when managed well but uncontrolled debt can become an overwhelming burden that hinders your progress toward financial goals. For instance, your credit score, which is crucial for securing future loans, is directly impacted by your debt levels. Lenders use your credit score to assess your reliability in making timely payments and to set your interest rates.

How to start: Begin by listing all your monthly obligations along with the interest rates for each type of debt. Prioritize paying off debts with the highest interest rates first, such as credit cards, payday loans and certain medical bills.

Stay on track: Be mindful of the money you borrow. Avoid taking on too much debt for unnecessary expenses or for assets like vehicles, which lose value over time. Regularly review your progress and adjust as needed. Your financial advisor can help you develop a personalized debt management plan. 

Tip: If you're overwhelmed by multiple debts, consider debt consolidation to simplify your payments and potentially reduce interest rates. Homeowners might consider using the equity in their homes to secure a Home Equity Line of Credit (HELOC). Connect with a trusted financial professional to determine if debt consolidation is a viable option for you.

4. Prepare for the unexpected

Life is full of uncertainties, so it's essential to protect your assets and ensure your finances are secure in case of an emergency or the loss of a loved one. Being prepared can provide peace of mind and help you navigate challenging situations with greater ease.

How to start:

• Assess your coverage: Ask yourself "what if" questions and be realistic about the coverage you need. If you’re taking care of a loved one, discuss life and disability insurance with your advisor. You could also consider talking with an insurance professional about solutions like homeowners, renters and auto insurance if that fits your specific circumstances. 
• Update your will: Meet with a professional estate planning attorney and financial advisor to discuss and update your estate planning needs. This ensures your wishes are clearly documented and legally binding. 
• Create an emergency fund: Build a fund that can cover three to six months of living expenses. This fund will provide a financial safety net in case you temporarily lose your income. 

Stay on track: Review your emergency plans and coverages with an advisor annually to ensure you are prepared in case of an unexpected life event.

5. Save for retirement

Planning and saving for retirement now will provide peace of mind for your future, ensuring you have the freedom and flexibility to maintain your desired standard of living when you stop working.

How to start: The sooner you start, the better. Aim to have at least 10% of your monthly earnings, ideally between 10 and 20%. If your employer offers a matching contribution to your 401(k) retirement plan, take full advantage of it.

Stay on track: Evaluate your retirement savings annually. The start of a new year is an excellent time to review your current contributions and adjust as needed. Consider life changes or unexpected changes in income throughout the year. For instance, if you receive a pay raise, bonus, tax refund or monetary gift, allocate a portion of it to your retirement savings to boost your nest egg.

6. Save for your long-term goals

Saving for long-term expenses can significantly reduce your need to borrow, making it easier to achieve major financial milestones like buying a home, planning a wedding or booking a perfect getaway.

How to start: Project the cost of the goal and determine how much you can realistically save based on your timeline. For example, if you’re planning a $25,000 wedding in two years, you would need to save $12,500 annually or about $1,000 each month. Open a dedicated savings account and set up automatic transfers from your paydays and bonuses to ensure consistent savings.

Stay on track: Review your progress monthly and adjust your savings based on any positive or negative changes to your income. Regular monitoring will help you stay aligned with your goals and make necessary adjustments to keep your financial plan on course.

Additional Tips

• Be realistic: Set achievable goals and define clear actions to reach them. It’s important to have a realistic understanding of what you can accomplish within your financial means. 
• Start small: Big goals are achieved through consistent, small steps. Begin with manageable habits that can lead to significant changes over time. Even saving a little each month can add up to a substantial amount. 
• Stay disciplined: Remember that your friends and family may have different financial priorities. Don’t hesitate to stick to your budget, even if it means saying “no” to certain expenses. Discipline is key to long-term success. 
• Keep yourself accountable: Regularly meet with your financial advisor who can provide guidance and recommendations to align with your goals. They can help you stay on track and make the necessary adjustments throughout the year to ensure your plan remains effective. 

Ready to get started? Connect with an advisor today.