New Year's resolutions often feel like a heavy burden we place on ourselves, only to feel guilty when life gets in the way by February. It's okay to admit that money management can be stressful, but it doesn't have to be an all-or-nothing struggle. You deserve a financial life that feels clear and manageable, not one that adds to your daily pressure.
Get your financial house in order
It seems obvious, but many of us skip the most crucial step of simply getting organized. Before you set big goals, do yourself a favor and gather your data. Start by making a checklist that includes anything that touches your money.
This list should cover income sources, workplace benefits, taxes, savings and investments, debt, and insurances. Once you have it all in front of you, ask yourself how your goals affect each item.
Finally, take a moment to zoom out and review your list. Ask yourself a few honest questions. When was the last time you looked at these items, and how often do you review them? How do you feel about your progress so far? Are there any changes you need to make for upcoming life milestones? This exercise brings clarity and reduces stress so you can make informed decisions for your life.
Squirrel away more cash
We all know we should save, but the data shows it's still a struggle. A 2022 Bankrate survey of roughly one thousand people found that less than half can cover a $1,000 unexpected expense. We know we should pay ourselves first, but feeding an emergency fund is often harder than it sounds.
Why does this matter? An emergency fund provides a cushion against job loss, health issues, or surprise bills. The best way to build one is to automate it. It has never been easier to sock away a few extra dollars periodically using automation.
If your employer allows it, set up a direct deposit that sends a percentage of your paycheck straight to savings. You won't miss it, and you will thank yourself as you watch your reserves grow. It doesn't matter how much you save to start. The goal is to build the habit.
Fortify your estate
There is a common myth that estate planning is only for the wealthy. That is simply not true. If you own anything, such as a house, a car, or a business, you can make arrangements for your estate. This isn't just about assets. It is also about who handles your affairs if you pass away or become incapacitated.
There are basic steps everyone should consider. A good start is having an attorney draft a will to designate where your assets go. Without one, the courts decide for you.
It is important to note that bank accounts or properties held jointly pass to the surviving owner automatically. Retirement accounts and life insurance policies with a named beneficiary also go directly to that person. These accounts circumvent a will entirely.
You should also designate a Durable (or Financial) Power of Attorney (FPOA) to handle your financial affairs if you are unable to do so. Finally, look at your advance medical directives. A Healthcare Power of Attorney (HCPOA) acts on your behalf for healthcare decisions, while a living will instructs medical staff on your wishes for life-sustaining care.
Monitor your credit score
Lenders use your credit score to determine your creditworthiness. Generally, a higher score means a lower interest rate on loans. According to Equifax, a score between 580 and 669 is fair, 670 to 739 is good, 740 to 799 is very good, and 800 and above is excellent.
If you aren't monitoring your score, now is the time to start. Most credit card companies and banks let you track it for free on their apps. If you prefer a detailed report, you can get free TransUnion, Experian, and Equifax reports at AnnualCreditReport.com.
Prioritize your physical fitness
We know exercise helps mental health, but it also supports financial fitness. Studies have shown that regular exercise can make you better equipped to manage your finances. It increases productivity, boosts energy, and improves self-confidence, all of which make tackling financial decisions easier.
Exercise also reduces stress. This makes it easier to focus on getting your finances in order. Whether it is a walk around the block or a full workout, your financial health will thank you in the long run.
3 tips to stay on track
Resolutions are hard to keep. Here are three tips to help you stick to your new roadmap.
Take the 1% pledge
Don't try to fix everything overnight. Focus on taking one step in the right direction. Even a 1% change in your savings or spending can add up significantly over time.
Habit stacking
Stacking occurs when you add a new activity to an existing good habit. Try adding a small financial task to the beginning or end of something you already enjoy doing.
Schedule money "dates"
Be accountable. Schedule periodic financial check-ups with someone you trust who will hold you responsible for your goals.
The Facet difference
At Facet, we believe that financial health is about more than just investment returns. It's about how your money supports the life you want to live. That's why you'll work with a CFP® professional who collaborates with you to create a personalized roadmap.
We don't charge asset-based fees that eat into your growth. Instead, we offer a flat membership fee for comprehensive advice that covers everything from your emergency fund to guidance on your estate planning needs. (Estate document preparation is available through our partner, wealth.com, for a separate fee). It's objective, fiduciary advice designed to help you achieve self-fulfillment and peace of mind.
