Stick to your guns, Keep mind loaded
For the first time in a while, New Year's Eve may feel more like a glimmer of a regular celebration — and a powerful wave of hope for the future is sure to be present at any New Year's celebration this year. Your annual resolutions may feel different than before, and it's important to take stock of what's important in your life long before the (party!) clock strikes midnight on December 31. If there's anything that we've learned in 2021, it's not to take our health for granted; in 2022, a renewed focus on your own lifestyle and priorities may be top of mind.
And we're not just talking about a new diet or fitness routine — set your sights on revolutionizing your mental health, troubleshooting your sleep routine or transforming your living spaces (goodbye, messy closet!).
The good news about New Year’s resolutions is that you get a fresh crack at them each year. Here are some financial changes that you should resolve to make in the year to come
?KEY TAKEAWAYS
It’s time to make some investing resolutions. The start of a new year is a good opportunity to complete a financial review of the year just passed and see what you’ve accomplished in terms of building your wealth, increasing your net worth, and growing your investments. Only then can you consider which financial resolutions will help you achieve your money goals going forward.
Calculate Your Net Worth
If you haven’t already done so, the New Year is as good a time as any to determine what you’re worth financially. Calculating your net worth is a key step in assessing your financial health and reaching your financial goals.
Spending time around high achievers can boost your own performance. If your New Year's resolution is to run a marathon or write a book, you'd be wise to start hanging around friends who've made it to the finish line (literally or figuratively) and can show you how it's done. You'll pick up a bit just by spending time together because you'll be inclined to conform to their patterns of behavior. But research and studies done by others show that if you explicitly ask successful friends how they achieved a shared goal and try out those tactics yourself, you'll gain even more ground.
When you reach your goal, it’s time to celebrate, of course. But it’s also time to plan how you’ll stick with it moving forward. Making a budget, eating for better heart health, or getting into a regular fitness routine are all positive lifestyle changes that are worth sticking with for more than just the year. Use your sense of accomplishment to further fuel your healthy habits so that you can keep feeling good—and proud of how you’ve bettered yourself—for years to come.
Pay Down Your Credit Cards
If you owe money on your credit cards, determine how much you can realistically afford to pay off during the year. For best results, try not to charge additional purchases on those cards while you’re trying to pay down what you owe. If you have high-interest credit card balances, consider whether it would be more beneficial to pay off those high-interest debts or add to your savings.
If your focus is just on the endgame, it’s easy to feel discouraged when progress plateaus around the one-month mark. That’s why it’s crucial to recognize and reward the smaller successes along the way. If your goal is to run a half-marathon, don’t save the party for the finish line. After each long run, reward yourself with a good book, new music, or fancy latte from your favorite coffee shop. To help you track important milestones and stay motivated along the way,
Review Your Credit Report
Make sure that you check your credit report regularly, and take steps to repair any negative aspects. Now that you’re entitled to three free credit reports each year,6 there is no excuse for not reviewing what is one of your most important financial reports, especially since errors in these reports are not uncommon.
It’s easy to keep tabs on your credit report, whether that’s getting one free copy a year from the three reporting agencies, or reviewing your history through any number of free credit monitoring sites.?
?A poor credit report could adversely affect the amount that you are able to save, as it could result in your paying higher interest rates on loans, thus reducing your disposable income.
Review Life Insurance Needs?
As you move through your career, your life insurance needs will continue to change. Give some thought as to how much protection you need, and compare it to the coverage that you currently have through your employer’s benefits package.
Consider whether you need more or less life insurance and whether your needs would be better satisfied by term or permanent life insurance. Also, review your other? insurance coverage to determine whether the amount you have is adequate.
Reassessing your goal throughout the weeks and months it takes to get there is essential. Once you start making changes, you may find your original goal was a little unrealistic. Still sticking with it once and even 10X. I would encourage people to, even after a month, reevaluate their goals.
How Do You Maintain Financial Resolutions?
The key is to set realistic targets and remind yourself why you made the resolution when you’re tempted to give it up. Transferring money from your checking account to a designated separate saving or investment account that’s not easily accessible or having part of your paycheck automatically deposited in a savings account can also help to remove any temptation.
Obviously, it’s okay to change your mind after making a resolution public and realizing it’s not sustainable, or it’s actually making you unhappy or more stressed in a way that really doesn’t feel worth it or productive. But if you’re really hoping to change certain habits in the long term, going public might be a good idea.?
People who write down their goals feel a greater sense of accountability and have a much higher chance of accomplishing them, You might be more likely to achieve your resolutions if you make them public.
How Much Money Can I Put Money Aside Each Month?
That depends on your individual circumstances. Once you work out how much you have coming in and review your spending habits and debts, it should become clearer how much you can reasonably set aside.
Some expenses, like a mortgage and utilities, don't allow for wiggle room, but there may be some room to cut down on others and allocate that money elsewhere. Generally speaking, financial experts recommend saving at least 20% of your income each month.
Often, what we don’t realize is that the problem isn’t that we aren’t capable of sticking to our resolutions. The problem is that we need to do a better job making new year goals that are actionable and achievable. Otherwise, it’s almost like setting yourself up to fall short.
What Is the 50-20-30 Budget Rule?
The 50-20-30 budget rule is a simple template designed to help people reach their financial goals. Senator Elizabeth Warren (D-Mass.) popularized the 50-20-30 budget rule in her book "All Your Worth: The Ultimate Lifetime Money Plan." According to this rule, 50% of your income should be spent on essentials, 20% should be saved, and the remaining 30% allocated to discretionary, non-essential purchases, or "wants."
Most of us strive for efficiency when it comes to achieving our goals. If you want to get fit, or better financially,? you figure a punishing workout will be just the thing to produce rapid progress. If you want to ace a class, you assume long, distraction-free study sessions are key. But research has shown that focusing on efficiency can leave you high and dry because you'll neglect an even more important part of the equation: whether you enjoy the act of goal pursuit.
The Bottom Line
Take this opportunity to restate your financial resolutions simply and clearly for the New Year. Be cautious about setting too many or unrealistic financial goals. Otherwise, you may be unable to accomplish any of them.
It may be a good idea to maintain a checklist to keep track of how you are doing throughout the year so that you can make any necessary modifications. If you have a financial advisor, consider meeting with them to review the goals and objectives that you have established.
Find ways to stay on track with resolutions using a planner to help you, and checking off daily fitness goals and frequent decluttering tasks feels that much more achievable. This year, it's time to put you first. For even more "new year, new you" inspiration, don't miss these inspirational New Year's quotes.