Money

6 New Year's Financial Resolutions

Mary Van Keuren | Apr 10, 2022

We all know it but hate to admit it: It's easy to make resolutions but hard to keep them. A resolution works best when it becomes a year-round practice, not just a goal for January.

Let's discuss some new year financial resolutions that can improve your financial health no matter the time of year. Don't worry: You can ease into them slowly and don't have to do them all at once. Read on if you'd like some tips on how to get your finances in order — and keep them that way throughout the year.

Disclaimer: This information is meant to provide background and should not be taken as financial counsel or advice. Consult a certified financial planner for help organizing your estate.

1. Have a budget

If you're spreadsheet-adverse, the thought of sitting down and writing out a budget may make you shiver. But your budget doesn't need to be written out in Excel; a budget could simply be a list of your expenses and your income jotted down on a scrap of paper.

What's the point of a budget? The best way to get ahead financially is understand where you are now and plan from that starting point. You'll become closer to your new year financial goals once you have a handle on how much is coming in and going out of your wallet and bank account each month.

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2. Trim unnecessary expenses

Once you've written down your monthly budget, you may wonder how to stay on top of your finances. One way is to do some judicious trimming. Only you can determine what can stay and what should go, but one tactic that works for many people is writing down every penny you spend for a specific period, such as a week. Every expense, no matter how small, should be noted.

You may be surprised at what you find. Did you really spend that much on coffee? Was getting takeout all those evenings necessary? Small expenses add up quickly, and they're easy to ignore. Once you've gotten a handle on them, you can decide if, say, it's better to bring coffee from home a few times a week rather than buy it on the way to work each day.

3. Save, save, save

Financial advisors will often suggest that you "pay yourself first." Another way of putting it is to invest in your future by creating or adding to your long-term savings. Your new year savings plan could include making a monthly contribution to an IRA, pension, or other savings vehicle. If your employer matches your contribution or adds to it in a company pension, use this to your maximum ability.

Another must among new year savings tips, and perhaps the best one, is to save roughly 10% of your monthly income. In addition to retirement savings, it's a good idea to have three to six months of living expenses available in a form you can access when needed, like a savings account or money market fund. If something unexpected occurs, you could draw on this money to cover daily expenses.

4. Pay down debt

One way to save significant money is to pay your credit card fully each month. Getting rid of consumer debt should be at the top of your financial checklist. If you're carrying over a balance from month to month, you may be paying 20% or more in interest charges — empty charges that don't benefit you in any way.

If you have considerable credit card debt, make it one of your top new year financial goals to get it under control in 2022. If you have more than one source of debt, choose the one with the highest interest rate and focus there. If your debts are high, you may find a low-rate home equity loan or line of credit that would consolidate your debts and make them easier to pay.

5. Make a will

If you're still young, making a will may be the last thing on your mind. But if you're looking ahead at how to reach your financial goals, it's never too early to sit down with a lawyer and detail your wishes for your estate, even if it's not that ample.

Although you can hire a lawyer to draft your will, you can also use an online will maker to craft one for a very reasonable cost. Making a will is one of two tasks to undertake when preparing for the inevitable — what happens to your finances when you're not around. The second is purchasing a life insurance policy.

6. Review your life insurance

If you don't have life insurance yet, considering a policy should be one of your new year money resolutions. Whether you want to help protect your young family or be financially secure when you're older, life insurance can help you manage debt, protect your mortgage, and ensure a quality education for your children. Learn how much coverage you really need at Ethos.

Ethos Life offers term and whole life insurance policies in partnership with some of the top carriers in the insurance industry, including Legal & General America, AAA, and Ameritas Life Insurance Corp.

Getting a quote for life insurance online takes only a few minutes. Simply answer a short medical questionnaire, and you may qualify for one of Ethos' no-medical-exam policies on the same day.

The information and content provided herein is for informational purposes only, and it is not to be considered legal, tax, investment, or financial advice, recommendation, or endorsement. You should consult with an attorney or other professional to determine what may be best for your individual needs.