The new year is a natural time to reset for many of us, and presents an opportunity to turn a new leaf, dare to be optimistic, and focus on personal growth.
One area people may want to improve is their finances — whether that means getting out of debt, sticking to a budget, or simply becoming more financially literate.
Here are some tips for selecting a resolution you’ll be able to stick to, plus some financial goal ideas to get you started.
Start with SMART goals
Before you go out on a mission to tackle any specific goals, you’ll want to make sure you set realistic expectations.
Using the SMART acronym helps ensure clear, attainable goals. This means selecting goals that are:
- Specific: Keep them simple and clear
- Measurable: You should be able to easily track your progress and completion
- Achievable: While goals should be challenging, they shouldn’t be impossible
- Relevant: Make these goals clearly related to helping your current financial situation
- Time-bound: Give yourself a timeline for when you want to achieve each goal (or reach steps toward achieving those goals) — and stick to it!
Making sure your goals meet these standards will help ensure you won’t set yourself up for failure before you even begin.
Choose your financial New Year’s resolutions
Now that you know how to select the right goals, we’ve put together six New Year’s resolutions of the financial variety to help get you started on a path to better financial health for the year to come, and beyond.
Maybe not all of them will apply to you, nor should you expect to accomplish every one that does right away (remember, you want to set achievable goals!).
Consider starting with the goal that is the most pressing or important to you, then move on to the next. You may even find that as you achieve one goal, others will easily follow — especially because many of these areas of personal finance go hand-in-hand.
1. Reduce your spending
There’s always room to trim, but with so many bills and subscriptions, a few may go unconsidered. Here are some ways you might be able to cut back:
- Find a better mobile phone plan. If you’re not using all your minutes or data, ask your provider if there’s a less expensive alternative. Or consider switching networks, many give discounts to new customers or will even pay your termination fees if you switch from a different company.
- Make a grocery list — and stick only to that list. You’ll be less likely to impulse buy when you’re on a mission for a specific set of items.
- Start “clipping coupons.” Whether they’re from the local papers or digital store apps, you can save big with coupons. Some browser extensions can also automatically apply coupon codes as you shop online.
- Bring your own lunch and snacks to work. According to com you can save anywhere from $2,000 to $4,200 per year by preparing meals at home.
- Cut cable and be mindful of too many streaming subscription services. Do you really need Netflix, Hulu, HBOMax, Amazon Prime, YouTube Premium, Sling, and Disney+? Pick your favorites, then ditch the rest.
2. Pay down your debt
Credit card debt and outstanding loans can cost you a pretty penny in interest charges. And the recent holiday season might mean even more leftover debt — not quite the same appeal as leftover turkey.
Tackling debt can sometimes feel overwhelming but our five-step guide provides specific tips for putting a serious dent in your debt, like how to negotiate lower rates on bills and the merits of the “snowball method.”
3. Stick to a budget
Creating a budget does more than keep you on track — it can help identify your spending habits, making it easy to find where you need to improve or cut back.
There are a number of free apps that can help you create and stick to a budget with easy-to-use interfaces that can turn your phone habit into a savings habit. Follow our tips for creating a budget you can stick to, where we outline how to best track and allocate your spending.
4. Improve your credit score
A low credit score can be damaging to your overall financial health, and has implications from having to pay higher rates on home and car loans to hurting employment opportunities.
Once you know where you’re at, you can follow the steps to rebuilding your damaged credit.
5. Build an emergency fund
Unexpected expenses have a habit of popping up—unexpectedly. Challenges like a job loss or medical bills can make it difficult to pay your monthly expenses, but having emergency funds to cover those costs temporarily can make all the difference in the world.
Your emergency fund should be based on your monthly costs to cover bills, like rent or a mortgage, utilities, groceries, and other basic needs. The ideal fund should last you 3 to 6 months’ worth of expenses.
6. Become a money master
You don’t need a finance degree or a lifetime of budgeting experience to learn better money management.
Start off the new year on the right financial foot with our Finance 101 Resource Center or enroll in a free online personal finance course from the comfort of your own home. If you learn better by listening, Time’s NextAdvisor recently published their top 10 personal finance podcasts of the year.
Stick with it!
Studies show that while about 60% of Americans set New Year’s resolutions, only 8% report achieving those goals. By setting SMART goals and identifying the right financial goal(s) for you, you can make 2021 the best year yet for your wallet.