11 Simple Steps to Achieve Your Financial Resolutions in the New Year

After the decorations are put away and the pressures of the holiday season are behind you, take a few minutes to breathe. Then, focus a little energy on your finances!

Instead of making generic resolutions that often get abandoned within a few weeks or months, a savvy financial plan will solidify your long-term prosperity. The beginning of the year is a perfect time to review your finances—looking back to see what worked as well as forward to plan the year ahead.

Begin by sitting down with pen and paper—writing it down helps clarify your goals, priorities and intentions, and encourages regular progress. Streamline the process with these steps:

1. Review your 2022. The past few years have wreaked havoc on budgets across the board. The pandemic, job losses, supply chain issues, record inflation and interest rate hikes all made it difficult to make ends meet. So, don’t be too hard on yourself if you didn’t hit some, or even all, of your financial goals. Review the past year with an honest, critical eye and make note of what you’ve learned.
    

2. Track your spending. Your budget is the most important component of your financial plan because it tracks all money coming in and going out. Break your expenses down into categories—like utilities, insurance, food, entertainment and clothing. If you’re tracking every dollar, it’s easy to see where you can make adjustments and increase savings.
    

3. Set short- and long-term goals. Most people understand the importance of long-term financial goals. Essential to achieving them is establishing the short-term goals to help you get there. Otherwise, it’s easy to fall off track. Those short-term goals—or stepping stones—can help you keep your eye on the prize, accomplishing smaller milestones along the way.
    

4. Automate your savings. Grow your savings by putting it on autopilot. If you have to remember to move money into your savings account each pay period, it’s too easy to find some other way to spend the money. Automating your savings takes the emotion and choice out of the equation and, once you’ve adjusted to not having that money, you’ll likely never miss it.
    

5. Use bill pay. It used to be that people would take the time once or twice a month to write out their checks and pay their bills. These days, technology has made it easier than ever to pay your bills right from your phone. So, that bill paying session isn’t happening like it used to. The problem is, if you’re relying on your memory to trigger you to pay your bills on time, you’ve probably missed a due date or two. This, of course, can result in unnecessary late fees. Bill pay can help you avoid these fees—just set up payment dates on your mobile banking app or online banking site.
    

6. Increase your retirement contributions. Your retirement savings account is something that you should not set and forget. Because you may have experienced some changes during the past year, like increased or decreased income or a change in yur needs, you should revisit your retirement savings plan at least annually. Ideally, you should set aside 10% to 20% of your income for retirement. If that amount seems overwhelming, start with what you can afford. Then, increase your contributions by 1%—monthly or yearly, whatever works with your budget.
    

7. Review your insurance. Don’t forget this very important aspect of financial planning. Life happens—marriage, kids, house, boat, etc. By revisiting your coverage every year, it gives you the opportunity to make sure everything is up to date. Your review should include life, home, health, auto and disability. You may also benefit from meeting with a financial advisor to see if you need anything else, like long-term care or umbrella liability policies.
    

8. Ramp up your emergency fund. The last few years have, at the very least, shown us how important a robust emergency fund is to your overall financial health. If you recently needed to dip into your emergency fund to make ends meet, now is the time to make a plan to refortify your account. Of course, it’s impossible to predict when an emergency will arise, so being prepared is the best strategy. Remember, your emergency fund should be large enough to cover six months of expenses. It's important to note that you don't have to get to that goal immediately, but put a plan into place to contribute regularly and work to replace any funds you use.
    

9. Rebalance your investments. If your investments have taken a hit recently, you’re not alone. The stock market has had a lot of ups and downs over the last few years which may have left your portfolio out of whack. Review your values, goals and risk tolerance and make sure your investments are still in line.
    

10. Check your credit report. It’s important to review your credit report every year. What are you looking for? Credit accounts that have been paid off that are showing as still active, open lines of credit that you are unaware of or incorrect personal information like birthdate or Social Security number. Mistakes on your credit report can lower your credit score, possibly causing you to pay more in interest fees on loans, lose out on rental opportunities (apartments, etc.) or even be turned down for jobs. You are entitled to one free copy of your credit report from each of the three major credit bureaus (Experian, Equifax and TransUnion). Visit annualcreditreport.com to order yours.
     

11. Assess your estate plan. An estate plan is not just for those who have a lot of money or assets, it’s something that everyone should have as part of their financial plan, no matter how much money you have. It doesn’t have to be elaborate—your estate plan can be as easy as three or four basic documents. Once you have an estate plan in place, be sure to review it annually and make any necessary updates as life changes.

Putting together a solid financial plan at the beginning of the year can help set you on the path to financial wellness. If you need some support or guidance, consider meeting with an advisor at Mountain America Credit Union. They can help you identify your priorities and put together a plan to reach your goals.