In 2017, a study showed 22% of respondents had financial resolutions for the new year.1 Whether you’re making a money-related resolution for the first time this year or again, we put together a list of a few financial goals you can tackle this year (and how to get started)!
1. Pay down (or off) your debt
One of the most common resolutions have to do with paying down debt. Paying off loans ahead of schedule helps you save on interest and frees up money in your budget.
If you want to pay off or at least pay down a substantial amount, it’s important to have a plan. Think about restructuring your debt and strategically re-paying it to reduce the amount you pay in interest.
Consider tackling debt with the highest interest rate first. Continue to make your payments to all your loans (ideally more than the minimum) and put extra funds such as a bonus, gift, or overtime towards paying down the loan with the highest interest rate. Once you pay down one debt completely (great!), continue this strategy with the next highest interest rate. Ultimately, you’ll pay down all of your loans faster and spend less on interest.
If credit card debt is a concern, look into balance transfer specials where you can transfer your balance to another card with a special, lower rate so you can continue to make payments and paying less in interest. While this shouldn’t be a frequent go-to for credit card debt, it can be helpful if you’ve either spent more or haven’t been able to pay off your card due to unforeseen circumstances.
- Tip: Take advantage of aggregator tools such as Money Management which can track your debt and tell you when it will be paid off in full as well as provide strategies to pay it down sooner.
2. Build an emergency fund
Another resolution is to build an emergency fund. Life happens. Having an emergency fund will help you handle and navigate anything unpredictable that may come along. You can use this money to cover any unexpected larger expenses including: auto repair, job loss, or medical bills.
To create an emergency fund, start by looking at your budget and finding any leftover cash you have every month. Begin putting that money in a savings account separate from your existing savings account so you aren’t tempted to use it. How much you should save depends on your financial circumstances. A general rule of thumb is to have enough to cover three to six months of living expenses.
Set up automatic transfers to your savings account through online banking or payroll deductions to help set aside extra funds without even thinking about it.
3. Save for retirement
Whether you’re nearing retirement or still early in your career, saving more now will help you later down the line. Make it a priority to contribute as much as you can to your 401k this year. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan increased from $18,000 to $18,500.2
In addition to employer retirement plans, setting up an Individual Retirement Account (IRA) allows you to start saving for your future now. Many financial institutions offer both Traditional and Roth IRA options and you can work with an IRA specialist to determine which is best for you.
If improving your financial health is a resolution, put together a list of what specifically you want to tackle and a few steps you can take to achieve them. In preparation for the new year, take a moment to review your credit score and get your free annual credit report. Small changes can make a big difference when it comes to improving your score.
Track your progress throughout the year and understand achieving your financial goals won’t happen overnight. Keep in mind it’s not an all or nothing approach. Even if you can’t save as much as you want one month, it’s better than saving nothing and still getting you closer to your goals.