Each new year brings about an opportunity to reflect and reset. When it comes to resolutions, we can’t think of anything more impactful than to add financial wellness to your list of physical and mental resolutions.
Here are 11 ways to kick off the new year with financial goals that will truly make an impact:
1. Track Your Expenses
If you aren’t tracking expenses already, now’s the perfect time to start! When you track where your money’s going, you may be surprised at just how much you’re spending on certain categories. Or, you may catch an unused subscription or two that you can cancel.
Regardless, expense tracking is the first step towards taking control of your finances, and there are many apps that can help you get started if spreadsheets aren’t your thing.
2. Create a Budget
A budget takes your income, plus everything you learned from expense tracking to create a comprehensive plan that will help you achieve your financial goals.
If you already have a budget for the previous year, take some time to revisit it before the new year. Perhaps you received a pay increase or change in your expenses, which would affect your budget moving forward. Or, maybe you had a category for the prior year for which you consistently overspent.
AAFMAA’s simple budget plan can help get you started.
3. Set Up Automatic Savings
When you automate your savings, you can essentially “set it and forget it” and consistently work towards your savings goals — whether that’s saving for a home purchase, education, or even just holiday shopping.
Check out these five easy ways to save money automatically.
4. Review Your Credit Report
You get three free credit reports each year (one from each of the three credit bureaus: Equifax, Experian, and TransUnion), so don’t waste the opportunity to review them, especially since errors are not uncommon. Request your free credit reports at AnnualCreditReport.com.
5. Tackle Credit Card Debt
Whether you are tackling credit card debt left over from the holidays or something more long-term, debt can feel like a heavy burden.
These budget tips can help you tackle your credit card debt using the 50/30/20 rule.
6. Increase Your Monthly Mortgage Payment
While it won’t lower your monthly mortgage payment, paying a little extra each month can help in two ways:
- It can help you save on interest. By paying more principal each month, you slowly but surely lower the principal balance and therefore, the interest charged on it.
- It can shorten the length of the loan. If you have the ability to do so, making extra payments on your mortgage can help you build equity faster and reduce the amount of total payments you’ll have to make, giving you that much more time being mortgage-free once you’ve paid off the loan.
It could be one extra mortgage payment a year, two extra mortgage payments a year, or an extra payment every few months. Whatever the frequency, your future self will thank you. Another way to do this is to “round up” your mortgage payment. For instance, if your mortgage is $1,576, consider rounding up to $1,600.
7. Add to Your Emergency Fund
Life is filled with unexpected surprises, most of which seem to arise at the worst possible time — when you’re already strapped for cash. This is exactly why every military family needs an emergency fund.
So, how big should your emergency fund be? Well, many experts will say that an emergency fund should consist of 3-6 months worth of your typical living expenses.
Now, this doesn’t mean that you should dump the majority of your paycheck into an emergency fund right away. Build it into your budget, set realistic goals, and start small. Even $5 a paycheck can go a long way when you stay consistent.
8. Review Your Retirement Account(s)
When you set your initial contributions for your retirement account, it’s easy to consider it done; but that’s not at all the truth. In order to stay on track, you’ll want to review your retirement plan on a yearly basis, and the start of the new year is the perfect time to do so!
You’ll want to:
- Confirm account access and consider updating your password to prevent fraud
- Adjust for any life changes
- Consider increasing contributions by 1% each year
- Review and update beneficiary information
And finally, don’t be afraid to reimagine how you want to live in retirement. As you get closer to retirement, your plans may change and that’s okay. Reviewing your accounts annually allows you to pivot when needed to ensure you’re on track even as your end goals change.
9. Buy Life Insurance
Buying life insurance can feel mundane, and it is something many people put off for too long.
Life insurance is one of the best ways to provide for your loved ones after you pass, but can also be used to invest. Plus, you’ll never be younger than you are right now, so you can lock in the best rates now to give your family peace of mind for years to come.
AAFMAA makes it easy to get the affordable coverage you deserve by offering a variety of term and whole life policies for every stage of life. Request a free online quote and check out their policies with guaranteed acceptance.
10. Start Investing
At some point in your financial journey, it may make sense to allocate some savings to investing if you want to maximize the amount of money you can earn.
The good news? It’s never been easier to start investing! Here are a few ideas to get started:
- Sign up for a target-date mutual fund through your employer or broker
- Start a tax-advantaged retirement account (401(k) or IRA)
- Ask your broker about index fund options
- Put some money into a very low or no transaction cost Exchange-Traded Fund (ETF)
- Consider using an investment app like Acorns or Robinhood for smaller amounts
- Use a robo-advisor
11. Create a Will
Most families know that they should have a will, yet almost two-thirds of all Americans don’t have one. If you’re among them, don’t wait any longer.
If you die without a will, your estate is distributed according to your state’s intestacy laws, which may not align with your wishes and can make things difficult for your loved ones after you pass. Use this time of new beginnings to prepare your family’s future and put estate planning on your list of resolutions to keep.