3 Financial Resolutions for the New Year

​It’s a new year already. For many, that means it’s time to implement resolutions and strategies for self-improvement. Weight loss and fitness goals are popular resolutions. So, too, are goals related to education and career advancement. Unfortunately, nearly 80 percent of all resolutions fail by February.1
 
This year, consider adding some financial resolutions to your list. With some simple changes in habit and behavior, you can significantly improve your financial picture. The key, of course, is to stay consistent and stick with your resolutions.
 
Below are three financial resolutions to consider, along with tips on how to stay committed. If you’re worried about your financial picture, make 2018 the year you take action.

Protect yourself from risk.
 
The whole point of a resolution is to help you achieve a long-term goal. You probably have many long-term financial objectives, such as funding an enjoyable retirement or paying for your child’s education. While your goals may be important, it’s also critical that you take steps to protect yourself from risk.
 
No matter how disciplined you are about saving, all it takes is one catastrophic event to undermine your progress towards your goals. A medical emergency could generate significant health care bills. A disability or job loss could threaten your savings. If you’re the family breadwinner, your premature death could throw the family into financial chaos.
 
Take steps this year to reassess your risk exposure. Do you have sufficient life insurance protection to support your loved ones? How would you and your family deal with a long-term disability? If you’re approaching retirement, consider how long-term care could threaten your financial stability. A financial professional can help you analyze your needs and implement a protection strategy.
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Boost your savings.
Many Americans have difficult saving money. While you may have a real desire to save more money, it may be difficult to do so. After all, life can be expensive. You may feel like every penny is needed for more urgent expenses, like child care, utilities, or your mortgage.
 
However, if you examine your budget and make some tough spending choices, you probably have the ability to save more than you think. For many people, the key to saving is taking the decision-making out of the equation. If you set your saving efforts on autopilot, you won’t have to make a decision about whether to use the money for bills.
 
Your 401(k) probably gives you the ability to make pre-tax contributions straight from your paycheck. That can be an effective way to automate your retirement savings. You can also set up automatic transfers from your checking account to a short-term emergency fund, an IRA or any other savings vehicle.

Use a budget.
Finally, and perhaps most important, make 2018 the year you start using a budget. A budget can be the most powerful financial tool at your disposal. Unfortunately, nearly 60 percent of Americans don’t use a budget.3
 
You can use a wide range of tools to develop your budget, from apps to software to even a basic spreadsheet. No matter what you use, the elements of a budget should be the same. You’ll want to list all your income sources and all your expenses. Break your expenses into categories such as housing, auto, child care and others. Then track your spending so you can see where your money goes.
 
You can use your budget to make purchasing decisions. As you become more disciplined with your budget over time, you should start to see your expenses go down, which should then free up cash for savings and other goals.
 
Ready to implement your financial resolutions? Let’s talk about it. Contact us today at Financial Solutions Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.


 
1https://health.usnews.com/health-news/blogs/eat-run/articles/2015-12-29/why-80-percent-of-new-years-resolutions-fail
2https://www.nerdwallet.com/blog/average-credit-card-debt-household/
3http://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html
 
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