5 financial resolutions you’ll want to keep this new year

If you're looking to start the New Year off right, there's no better way than by setting financial resolutions and having a plan in place to stick with them. Whether you're organizing your finances, saving more money, or protecting your assets, setting financial intentions is a great way to achieve long-term success. 

In this article, we'll discuss five of the most important financial resolutions you'll want to keep to get your finances on track for the New Year. From bulking up your emergency fund to setting up an estate plan, we have all the tips you need to achieve your financial goals this year. So let's get started!

Financial resolution #1: Get your financial house in order

As obvious as it seems, many people often skip this extremely important step. So before you get started, do yourself a favor and get financially organized. Here's how:

• Start by making a checklist. Be sure to include things like income sources, workplace benefits, taxes, savings and investments, debt, and insurances—anything that “touches” money. 
• Then, think about what you want to achieve. Ask yourself how your goals will affect each item on your checklist.
• Finally, zoom out and review. Go through your plan one item at a time and ask yourself the following:
  • When was the last time you looked at it, and how often do you review it?
  • How do you feel about your progress?
  • What changes (if any) do you need to make in anticipation of an upcoming life milestone?

This exercise will help you gain clarity and reduce stress, which can lead to making informed decisions to live your optimal life—simply by getting organized. 

Financial resolution #2: Squirrel away more cash

Americans could be better at saving. A 2022 Bankrate survey of roughly one thousand people found that less than half can cover a $1,000 unexpected expense. Financial Planning 101 tells us to pay ourselves first, yet we still struggle to feed our emergency funds sufficiently enough to prepare for the unforeseen.

Why is an emergency fund important? It's vital to have a cushion in case of job loss, health issues, or other unexpected expenses. Start small by setting aside a few dollars each month—you'll be surprised how quickly it adds up.

The good news is that it has never been easier to sock away a few extra dollars periodically. By automating transactions, money-saving apps make the process effortless, so you don't have to worry about remembering to transfer your money from one account to another.

If your employer offers direct deposit to more than one account, schedule a percentage of your paycheck to be deposited into savings. You won't miss it and will thank yourself as you watch your reserves grow. The key is that it doesn't matter how much you save, but rather that you get in the habit of regularly building up your emergency fund. Once your income increases, so too will your contributions.

Financial resolution #3: Fortify your estate

Despite what you may have heard, estate planning is not reserved for just the wealthy. If you own anything—a house, a car, a business—you can make plans for your estate. Aside from assets, estate planning also involves who handles your affairs should you become incapacitated or pass away. 

There are basic steps everyone should consider to plan for their future welfare and their loved ones.

Create a will: A good start is having an estate planning attorney draft up a will. A will designates where your assets will go when you pass. If you don’t have a will, the courts will decide how your assets are distributed—not your family.

Note: Bank accounts or properties held jointly pass to the surviving owner. Retirement accounts and life insurance policies with a named  beneficiary will go directly to the beneficiary. These accounts circumvent a will. 

Designate a Durable (or Financial) Power of Attorney (FPOA). This person will be in charge of handling your financial affairs should you become incapacitated. 

Set up advance medical directives. Two things to consider:

• Healthcare Power of Attorney (HCPOA): A trusted individual that acts on your behalf for healthcare decisions when you are unable to. 
• A living will: This type of will concerns end-of-life medical decisions. This document instructs medical staff on how you wish to be treated for life-sustaining medical care.

Financial resolution #4: Monitor your credit score

Your credit score is what lenders use to determine your creditworthiness. In most cases, the higher your score, the lower your interest rate will be. According to Equifax, one of the top three credit reporting agencies, 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.  A good credit score is also important if you are renting a home or applying for a job, and may even determine whether you get approved or hired.

If you’re not monitoring your score as closely as you track your daily steps, what better time to start than now? It’s easy. Most major credit card companies and banks allow you to track it for free on their apps. Or, if you’re credit-averse, you can get your free TransUnion, Experian, and Equifax reports at AnnualCreditReport.com.

Financial resolution #5: Prioritize your physical fitness

You’ve probably heard that regular exercise improves mental health. But did you know that having a healthy body and mind can also improve your financial fitness? 

Studies have shown that regular exercise can help make you better equipped to manage your finances. Not only does it increase productivity and concentration, but it also boosts energy levels and self-confidence, which makes tackling financial decisions easier.

Exercise can also help reduce stress levels, making it easier to focus on getting your finances in order. Moreover, regular workouts can help reduce your risk of chronic conditions, which can adversely impact your financial well-being. 

So if you're looking to get a grip on your finances, remember to add regular exercise into the equation. It can be as simple as taking a walk around the block or as rigorous as a full-body workout. However you choose to get active, your financial health will thank you in the long run.

3 tips to help you keep your financial resolutions this year

Resolutions only matter if practiced consistently. But unfortunately, like anything new, they’re hard to keep. Consider these three tips to help you stay true to your new plan.

1. Take the 1% pledge. One of the keys to success is getting started. Don’t worry about achieving success overnight. Focus on taking one step in the right direction. Even a 1% change in your savings or spending can add up over time.
2. 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 else you enjoy doing.
3. Schedule money “dates.” Be accountable. Schedule periodic financial check-ups with someone you trust who will hold you responsible for your goals.

Final word

If you're looking to improve your financial well-being in the New Year, consider boosting your emergency fund, creating a rock-solid estate plan, tracking your credit score, and improving your overall health. Most importantly, start small, and break your goals into manageable steps you know you can handle. By keeping it simple, you’ll be able to maintain balance and stay on track.