Secure your financial future
Welcome to the new year! It’s a time for fresh starts and new beginnings, and what better way to kick off the year than by committing to improving your financial life? Whether you’re looking to budget better, pay down debt, ditch bad money habits, or just get your finances in order, there are plenty of resolutions you can make to help you reach your goals.
1- Create a budget
Creating and following a budget is the key to financial success. In order to make a budget, you’ll need to do a financial analysis of your income, expenses, and investments. This may seem like a daunting task, but it’s essential for keeping your finances on track. If you don’t have the time or resources to create a budget on your own, there are plenty of tools and resources available to help. Software programs like Quicken and personal finance apps like Mint.com, PocketGuard, and You Need a Budget can all be useful for budgeting. Alternatively, you can use free budgeting templates or simply use a pen and paper. Whatever method you choose, make sure to stick with it in order to achieve your financial goals.
2- Save money every month
Another important resolution to consider is saving money. No matter how small the amount, it’s important to make a habit of setting aside some of your income every month for your future needs. This could be for an emergency fund, retirement, or any other financial goals you may have. If you’re not sure how to save, consider using an investment app like Acorns.com, which sets aside your spare change from debit and credit card transactions into a separate savings account. With interest rates on the rise in 2022, now is a great time to start saving, as your emergency savings accounts can earn a competitive return.
3-Pay yourself first
In addition to saving, it’s also important to pay yourself first. This means setting aside money for your future self before paying for other expenses. One way to do this is by contributing to a 401(k), especially if your employer offers matching contributions. Aim to set aside at least 10% of your income each month for your future needs. You can also pay yourself first by putting money into a savings account or emergency fund before paying for other expenses.
4- Evaluate your eating-out budget
Consider reducing your restaurant budget to save money. Eating out, whether it’s takeout or dining in, can add up quickly and blow your budget. Try cutting your eating-out budget in half to save $2,600 to $5,200 per year, which you can put into a savings account or jar at home for other needs, goals, or dreams. Cooking at home not only saves money, but it can also be healthier and more satisfying.
5- Review your subscriptions
Take a closer look at the subscriptions you have and consider if there are any that you can do without. It’s easy to sign up for a free trial and forget to cancel it before it becomes a paid subscription, but these charges can add up over time. In addition to streaming services, there are also subscriptions for a wide range of products, from cosmetics to razor blades to meal plans. It’s important to keep track of all these subscriptions and make sure you’re only paying for the ones that you truly need and use. By reviewing and canceling unnecessary subscriptions, you can free up money in your budget for other expenses or goals.
6- Start investing
If you want to make 2023 a successful year for your finances, one resolution to consider is starting to invest. Investing goes hand-in-hand with the “pay yourself first” resolution, as it helps you set aside money for your future needs. To get started, set a monthly plan for investing a certain amount of money every month and stick with it, regardless of what’s happening in the markets. There’s plenty of guidance available on building a beginner investment portfolio, so don’t be afraid to seek out expert advice. Remember to think long term and be disciplined, and you’ll be well on your way to achieving your financial goals.
7- Continue investing
If you’re already an investor, consider pushing yourself to invest more in 2023. There are many ways to save in a tax-advantaged manner, such as through a 401(k) or Roth 401(k) if your company offers one. In 2023, you can save up to $22,500 in a 401(k) or Roth 401(k), and an additional $7,500 if you’re over 50. Many employers also offer matching contributions, so make sure to contribute at least the amount that your employer will match. If your company doesn’t offer a 401(k), consider a Roth or traditional IRA. In 2023, you can save up to $6,500 in a Roth or traditional IRA and an additional $1,000 if you’re over 50. By continuing to invest, you’ll be taking important steps towards securing your financial future..
8- Make a Will
Having a will is crucial, particularly if you have a significant amount of assets. Brian Porter, professor of management at Hope College, advises making a will this year if you do not already have one. While hiring an attorney can be expensive, there are affordable options available such as online will makers like Quicken Willmaker & Trust and LegalZoom, which typically cost around $100.
9- Maximize Credit Card Rewards
For credit card holders, a fun financial resolution may be to maximize your credit card cash back, miles, or points rewards. According to Porter, if you are already paying off your credit card debt monthly and not incurring interest charges, you may want to consider applying for a new rewards credit card. Many credit cards offer generous enrollment bonuses, such as 100,000 miles for spending $3,000 in the first three months, which can be worth $1,000 or more. These bonuses can often be earned through everyday purchases like auto and homeowners insurance.
10- Analyze your insurance coverage
Siyu Wang, assistant professor in the department of economics at Wichita State University, suggests reviewing your insurance choices at the beginning of each year. This includes evaluating your health insurance options during open enrollment, but also taking a close look at your homeowners and car insurance policies. It may be worth shopping around to see if you can find a better deal, or if you are paying too much for coverage you no longer need. Wang also advises considering life insurance, and making sure that beneficiaries are set up appropriately.
11- Pay Down Debt
If you are in your 30s or older and have a large amount of debt, it is important to come up with a plan to reduce what you owe, even if it means making some financial sacrifices. According to Ganesh Pandit, associate professor of accounting and law at the Robert B. Willumstad School of Business at Adelphi University, having control over your debt is crucial for financial freedom. While it may not be possible to pay off all of your debt, minimizing the balance can still be beneficial. Pandit recommends starting by focusing on high-interest debt first and considering options like consolidation or refinancing to lower interest rates. He also suggests looking for ways to increase your income, such as taking on a side hustle or negotiating a raise, to help pay off debt more quickly. In addition, it can be helpful to track your progress and celebrate small victories along the way.
12- Start a 529 Plan
A 529 plan is a college savings account that offers tax advantages for saving towards educational expenses. According to Stacy Mastrolia, associate professor of accounting at Bucknell University’s Freeman College of Management, while 529 plans have been available since 1996, they are still not widely used by families. In fact, of families saving for their children’s education, only 30% of savings are held in tax-advantaged 529 accounts. Mastrolia notes that 529 plans offer tax-free growth when used for qualified education expenses, which can include tuition for private school as well as college. Therefore, starting a 529 plan early can be an effective way to save for the increasing costs of education.
