As we near the end of 2023, it’s time for new resolutions and goals. Studies show that about 60 percent of people make New Year's resolutions every year; however, only about 8 percent achieve them. Don’t let that be you this year!
One of the most popular resolutions each year is to be “healthier.” For most, this means eating better and working out; however, we can be financially healthier as well. Financial planning is very similar to fitness. It requires S.M.A.R.T. goals, a plan to achieve them, and discipline. Consider these four simple steps you can take today to start this year out successfully!
Determine Your Priorities for this Year
Are you aiming to hit three months of living expenses in your emergency fund? Saving for a big expense, such as a trip, house, or wedding? Is this the year to finally pay off those loans or credit card debt? Planning on starting to invest?
No matter what you want to accomplish this year, take some time to list out your priorities and establish small, achievable goals to reach them. If you want to increase your savings, automatically have 10% of each paycheck (or more if you are comfortable) deposited into your savings account. If you are paying off debt, attack your high-interest debt first; then, determine the monthly amount you can put towards other loans. If you are ready to start investing, determine which account is right for you and set up automatic monthly contributions.
Review Your Monthly Budget
It is not fun reviewing your monthly income and expenses, but it is important to reevaluate your spending and savings to ensure you are on track to meet your goals. Likely, your budget has changed over the year, so adjust as needed. Check your credit score as well, as that is a big piece of your overall financial health.
Increase Your Workplace Retirement Contributions
This is one of the easiest ways to increase your retirement savings. If you are contributing to your employer’s retirement plan, increase your contribution by at least 1% each year. You will hardly notice a difference in your take-home pay but will be grateful you continued to increase your percentage when you are ready to retire.
If you do not have a retirement plan through your job or are self-employed, now is a great time to either start or increase your contributions to a Roth IRA or IRA. If you are maxing those contributions out, consider opening a taxable investment account, which offers an additional vehicle to invest in.
Ask for Help if You Need It
Getting your finances in order and creating a plan can be stressful, but you do not have to do it alone! Share ideas and strategies with friends and family. Even Google can be a great way to do some research. If you are still feeling overwhelmed, this may be the year to seek guidance from a financial planner. You are never too young to start meeting with one!
This year will become whatever you make of it, so set yourself up for success and make yourself proud!