3 Financial Goals to Include in Your New Year’s Resolutions List
The countdown begins...
10…9…8…7… You pop some champagne, and pull out the poppers and streamers. We’re all ready to leave 2020 behind. It’s time to look ahead and enter the New Year with brimming enthusiasm. 6… 5… 4… This New Year’s celebration might look a bit different this year — one at home with fewer people, but that doesn’t make it any less significant. 3… 2… and then you think of those New Year’s resolutions. 1…. 0… Happy New Year! It’s a fresh start, which means it’s time for a New Year’s Resolutions list. While you can and should keep your workout and health resolutions on the list, here are some go-to financial goals anyone can accomplish.
Let’s make 2021 the year of financial success!
Goal 1: Pay off at least one debt
Resolutions should be attainable, helpful and inspiring. One realistic way to greatly improve your financial situation is to pay off at least one debt this year. Debt itself can feel incredibly overwhelming, especially when you’re dealing with more than one account. Instead of focusing on all of the debt as a whole, focus on just one debt, ideally an account with the highest interest rate that you can realistically pay off within the year.
Make sure to continue to pay the minimum payments on all of your other debts, but attack the heck out of just one debt, whether it’s a credit card, car loan, or student loan. Doing this will ultimately improve your credit score, and help you get on track to pay off all debt. And what a relief that will be!
Goal 2: Open a retirement account
66% of millennials don’t have any money put away for retirement. No one should have to work well into their 70’s. Retirement, or the “golden years,” are often some of the most fulfilling years of anyone’s life, but it also costs money. With the rise of inflation, increasing medical costs, there’s no such thing as being too prepared for retirement. Start by choosing the perfect retirement account for you. This could be a Roth IRA, Traditional Roth, Employer-Sponsored retirement accounts like a 401(K), HSA, and beyond. Each account has different parameters and benefits, so make sure to do your research and think about your long term financial goals. The next step is to open an account through a brokerage (human or robo-advisor) There are many to choose from including Fidelity, Ally, E-Trade, M1 Finance, Merrill Edge, and so on. Again, the rule of thumb is to assess what’s brokerage is right for you, and move forward.
If you already have a retirement account like a Roth IRA, consider opening up a Health Savings Account (HSA) or vice versa.The good news is you don’t have to have a lot of cash stashed away to open up a retirement account. Start by contributing $50 or $100 a month. That’s still exponentially more significant than contributing nothing at all.
If you do have several accounts, it’s a good idea to reassess where those investments are going, and if you want to rearrange investments. Keep in mind that these account contributions are long-term investments. Look for stocks, bonds, and alternative investments that will perform well in the long run.
Goal 3: Save at least 10% of your income each month
Generally, the rule of thumb is to build up a $1000 emergency fund. After that first step, you’ll want to eventually save up a year’s worth of income. But that’s kind of intimidating, right? How can you save all of that AND pay the bills? Well, instead of thinking about that macro number, just take it step by step, or more specifically: month by month.
Put aside just 10% of your monthly income. If you can afford to put aside more, go for it, but make it a goal to save at least 10%. Depending on your lifestyle, it may take some sacrifice. It might mean declining fancy dinners or takeout. Cancel those random app subscriptions that can significantly add up each month. Hold off buying the top shelf produce at the grocery store and instead, buy the imperfect produce that doesn’t look like it belongs in a Home and Garden magazine. You might have to rearrange your monthly budget, but at the end of the year, it will be all worth it.
Ultimately, the best way to attack financial resolutions this coming year is to be really honest with yourself, analyze your budget, and stay organized. Make a plan and attack those goals. Don’t let these resolutions slip aside by March like so many do. Resolutions are not a punishment. They are for your benefit, and to help set yourself up for success. You got this!
