As the New Year begins, it’s a great time to take stock of your finances and make sure you have a plan for your future. Having a financial plan is essential for long-term success, and setting New Year’s resolutions can help you stay on track. Whether you’re saving for retirement, a down payment on a home, or a big purchase, these financial New Year’s resolutions will help you get there. From setting a budget, to taking advantage of employer benefits, to investing smarter, these tips will help you secure your financial future. It’s never too late to start taking control of your finances, and the New Year is the perfect time to get started.
Set a Budget
First things first—set a budget. While it may seem cliché, setting a budget is one of the best things you can do to get your finances in order. Tracking your spending will help you see where you can cut back, while also knowing what you have allotted to spend on certain things. You can set a general budget, or track specific expenses like groceries or entertainment to make sure you’re staying on track. Using a free budget app can help you stay organized and make sure you’re on track each month. You can also try using a paper budget to make sure you’re really focused on it.
Take Advantage of Employer Benefits
If you’re lucky enough to have an employer that offers benefits, take advantage of them. Not only do many employers offer retirement savings accounts, but they may also contribute to them on your behalf. Employer-sponsored plans like 401(k)s, 403(b), or 457(b)s are an easy way to get started saving for retirement. If your company offers a matching contribution, it’s free money, so don’t pass up the opportunity to get a head start on retirement. If your employer offers other benefits like health insurance or a tuition reimbursement program, take advantage of those as well. They may be a great way to save money or gain access to services you may not be able to afford otherwise.
Pay Off Debt
If you have any significant amount of debt, the first thing you should do is start paying it off. You don’t want to let debt linger, as the extra money you’re paying in interest could be better used towards other things. Paying off debt has a two-fold benefit—not only will you be saving money by not having as much debt, but you’ll also be increasing your credit score by paying off existing debt. Paying off debt will help secure your financial future, as well as your ability to get a loan later on should you want to purchase a house or a car. Additionally, paying off debt could help you qualify for better health insurance plans, as some providers offer discounts to those without significant debt.
Start an Emergency Fund
Most experts recommend having at least six months’ worth of living expenses saved in an emergency fund, and it’s something you should start working towards as soon as possible. Life is unpredictable, and you never know when an emergency might pop up. Having an emergency fund will help you be prepared for unexpected expenses like medical bills, car repairs, or even job loss. It’s important to start saving for an emergency fund as soon as possible, even if you only start with $50 or $100 per month. This can be done by transferring a small portion of each paycheck towards your emergency fund, or setting up an automated monthly savings plan to make sure it happens.
Build Your Retirement Savings
Now is the time to start saving for retirement. If you’re in your 20s or 30s, this means you should start saving as soon as possible. Ideally, you’ll want to start saving at least 10% of your income for retirement. There are a few different ways to save for retirement, but the most common is through a 401(k) or 403(b) plan. If your employer offers a workplace retirement savings plan, you should definitely take advantage of it. You can do this by contributing as much as you can to your retirement savings account—ideally, as much as your employer will match.
Save for Big Purchases
If you have a big purchase coming up like a car or house, start saving for it as soon as possible. If you know you’re going to need a certain amount for a large purchase, set up an account specifically for that expense. This will help you stay focused on that goal, and make sure you’re actually saving towards it. You can either open up a special savings account, or put the money in your regular savings account. The key to saving for a large purchase is to not touch the money you’re putting aside. This way, you won’t be tempted to spend it, and you’ll be able to save up a significant amount.
Lastly, if you have a little extra money to save, consider investing it. You don’t need a lot of money to start investing, and there are a variety of low-cost options available. If you don’t have much to invest, you can open a low-cost investment account like an IRA, or consider a robo-advisor that offers low-fee investment options. If you have a little bit more to save, you can open a low-fee brokerage account, which typically requires a larger initial investment. Whichever option you choose, make sure you’re investing in smart ways that will help you make the most of your money.
Try Automating Your Finances
Finally, try to automate as many of your finances as possible. Think of ways you can reduce your monthly expenses and cut back where you can, but also make sure you’re contributing as much as you can to your savings and retirement accounts. Set up automatic transfers from your checking account to your savings account to make saving easier and require less effort on your part. You can also set up automatic contributions to your 401(k) or other retirement savings accounts, as well as investments, to make sure you’re saving as much as possible.
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