Resolve to do better next year.
The new year is a fantastic time to review your financial strength, pore over your budget and make big plans for next year. Not only is it a classic season for self-reflection and goal-making, but you can use year-end resources, such as annual bank statements and 12-month credit card summaries, to review spending. Consider taking a moment to meet with your financial advisor or tax professional to review what worked this year and make changes for the year ahead. Looking to make some financial New Year’s resolutions for the coming year? Here are 20 money resolutions to consider.
Identify financial goals.
Before you can make progress toward any financial goals, identify what they are. Are you hoping to earn a degree? Buy a home? Repay your auto loan? Finally contribute to your employer 401(k)? To increase your chances of success, “you have to be specific,” says Leanna Johannes, senior wealth strategist at PNC Wealth Management. A broad-based promise to “improve your finances” or “save more” may not demand the self-reflection or planning necessary to be successful. Take some real time to mull over what financial qualities you can improve this year. Consider your outlook, then outline a plan of attack.
Start tracking your budget.
Before you commit to sticking to a budget, resolve to track your spending each month. A range of apps and software programs can help you log spending. This important first step will let you identify spending leaks and diagnose where you’re going over budget. For a quick shortcut, look out for emails and mailings from your bank or credit card in January. You may receive a year-end summary or annual report from your credit card company or financial institution. This is a great resource with which to spend some time, identifying budgeting leaks, spending categories on which you tend to sink too much money and decisions about how to improve your spending for next year.
Check your credit report.
If you’ve stopped paying attention to your financial health, commit to requesting a free credit report on annualcreditreport.com this year. If everything looks correct, this exercise shouldn’t take more than an hour or so. If there are errors, catching them quickly can be valuable and save you headaches down the road.
Consumers are entitled to one free credit report each year from each of the three credit bureaus, which are Equifax, Experian and TransUnion. Any errors you see, such as late payments, unfamiliar debts or other inconsistencies, may be innocent mistakes, which can be disputed with the lender, or they may hint at fraud or a compromised account. Take stock of your debts and dispute any credit dings that look incorrect.
Commit to no-spend days.
Enlist a friend, family member or partner to commit to one “no-spend weekend” or “no-spend day” per month. Make that a time when no money leaves your hands or bank account — you’ll eat at home, find free entertainment and skip shopping. This may a be a particularly easy habit to develop during the cold months of winter when snuggling up with a good book, classic movie, home-cooked meal or glass of wine sounds preferable to venturing out into the cold. Commit to maintaining the habit throughout the year to get the biggest financial benefit and start a frugal financial habit.
Get healthy … without joining a gym.
Losing weight, gaining muscle or meeting another fitness goal may be on your New Year’s resolution agenda. Aim to reach your goal without taking on a pricey gym membership, especially if you have a history of dodging the gym. Try doing free exercise videos online, working out at the park or going on winter hikes. U.S. News My Money contributor Jon Lal recommends considering a range of free workout apps that let you stay indoors while keeping in shape this winter. Those free apps, which may include charges for upgrades, include Adidas Training by Runtastic, Fitbit Coach and Nike Training Club.
Boost retirement contributions.
If you’re looking to squirrel more away for retirement, commit to boosting your 401(k) contributions. At the least, contribute enough to your workplace plan to secure your employer’s match, which is typically between 3% and 6%, if one is offered. It’s a common refrain, but it’s true: Forgoing an employer match is like leaving free money on the table. If you can contribute more than the minimum, the maximum 401(k) contribution amount for 2020 is $19,500 (an extra $6,500 catch-up is allowed for those 50 and older). Other non-401(k) plans, such as IRAs, have different limits, and you can still contribute to your 2019 retirement account before the end of the year or the plan year expires.
Fast-track debt payoff goals.
Instead of saying, “I’m going to repay all my debt this year,” which is a lofty goal, commit to fast-tracking the payoff process. That may mean contributing an extra $50 per month to your debt bill. Consider whether you want to use the avalanche or snowball method to repay debt. The avalanche method focuses on putting any extra payments toward the highest rate loan first, a more mathematically sound strategy. The snowball method suggests paying off smallest debts first to inspire motivation, which may be more gratifying. Most online repayment interfaces will let you automate that extra payment so you don’t have to think about it for the rest of the year.
Cut back on bad money habits.
Identify a bad financial habit — eating out too often, paying full price for clothing, splurging on your pets — and promise to eradicate it this year. Identify alternatives or coping mechanisms when you want to indulge in your bad financial habit. Perhaps, if you’re shopping to cope with boredom or anxiety, taking up exercising or a frugal hobby like knitting can be a good replacement. If you’re eating out too often, try meal prepping or Sunday cooking sessions where you make bulk recipes for the rest of the week. Enlist a friend, family member or significant other to support you.
Automate good habits.
Take this moment, when you’re feeling gung-ho about your finances, to automate any good behaviors you’ve committed to. If you want to save more for retirement or repay debt, automate those monthly debits with your payroll office or your bank. Online banking and money-management apps make it easier than ever to put good financial habits on autopilot. Do it now, while you’re feeling motivated, so it doesn’t get lost in the yearlong shuffle. “The goal is to make it a habit and not something to reconsider on an annual basis,” says Ken Hevert, senior vice president of retirement and income solutions at Fidelity Investments.
Do home maintenance.
Aim to save money in the new year by doing preventive home maintenance, such as changing air filters, patching leaks and and having your air and heating systems inspected. These changes will save money throughout the year, including on your heating and cooling bills and by allowing certain appliances and systems to last longer. Some smaller projects can be great opportunities to improve your do-it-yourself skills, but if you need help on a larger task, bring on the professionals or an experienced neighbor or family member to ensure you’re not creating damage or breaking something that previously worked just fine.
Cut the cable cord.
Cutting the cord and getting rid of cable can stretch your monthly budget. Consider replacing your cable TV package with Netflix, Hulu, HBO Now, Amazon Prime or a digital antenna for local broadcasts. Remember that as streaming options become more plentiful and fragmented — this year saw the launch of Disney Plus for example — you’ll need to use restraint when deciding the streaming services to which you’ll subscribe. Carefully consider your viewing habits and what you can live without when it comes to content. After all, subscribing to eight services at $10 to $15 a pop starts to cut into your savings fast.
Go to the doctor or dentist.
An essential way to save money on medical bills is to take preventive measures to protect your health. If you’ve been putting it off because you feel healthy, resolve to visit the doctor and dentist this year to catch any medical maladies as early as possible. After all, your workplace, private or government health insurance may cover most or all of the expenses associated with routine medical visits. Catching anything serious early on won’t only improve your health outcomes, but it may also improve your financial strength by helping you avoid, say, a pricey surgery or a visit to the emergency room. Bottom line: Monitoring your physical health is helpful to maintaining your financial health.
Evaluate last year’s financial mistakes.
The new year is a great time to do some soul-searching, and that can include diving deep into financial self-reflection. Take an honest look at your financial performance last year. Did you overspend? Overborrow? Get passed over for a promotion? What are strategies you could have utilized to avoid those outcomes or reduce the financial damage? Not every financial downfall is avoidable, but some can be dodged or limited going forward. Last year’s mistakes are in the past, but you can do better in 2020, so commit to changing your behaviors. Reconsider your financial mistakes, and strive to perform better this year.
Rebalance your investment portfolio.
Market volatility, new money goals, financial hurdles and other unanticipated changes can impact how you should balance your investment portfolios. Keep an eye toward your long- and short-term goals and make sure you’re viewing the market with clear eyes and not a fear-based mentality. Are your investments still working for you? Have changes in fees, company structure, your goals or broader market forces made a once-attractive investment look less appropriate going forward? Commit to sitting down with your financial advisor or re-evaulating your investment statements with fresh eyes this year to determine whether your portfolio still matches your goals and timeline.
Assemble your financial team.
If you’ve been meaning to see a new tax preparer, financial advisor, estate planning attorney, insurance broker or another financial expert, set time aside this year to assemble your financial A-team. For financial advisors, there are lots of good places to start your search. You can ask friends or family for recommendations, try the Garrett Planning Network, which lists fee-only advisors, or head to the National Association of Personal Finance Advisors. Make sure to ask good questions, including queries about fee structure, services provided, the scope of your engagement and whether the advisor is a fiduciary, meaning that he or she is required to act in your best interest.
Re-evaluate your employee benefits package.
Yes, open enrollment is winding down. But take time next year to really dive into your employee benefits offerings. Are there educational reimbursement opportunities to consider? Do you have sufficient life insurance, health insurance and disability insurance, or should you be finding these products on the private market?
A few important concepts to understand are the difference between an FSA and HSA when it comes to health savings accounts and who can qualify for each. You’ll also want to take note of who pays your disability insurance premiums. If your boss is paying the premiums, any claims you make are taxable to you and will reduce the overall amount received. That’s something you should take into consideration when evaluating whether it’s sufficient.
Call your credit card company.
Take a few minutes this year to call your credit card issuer. If your account is in good standing, take this time to negotiate a credit limit increase, which can improve your credit score, or make the case for a lower annual percentage rate, or APR. If you do succeed in scoring a credit limit increase, make sure you can handle the temptation and not max out your credit or overspend each month. Spending up to the limit or making late payments will undo any credit score benefits that come from an increased credit card limit.
Subscribe to a personal finance podcast.
Resolve to increase your personal finance expertise by regularly listening to a personal finance podcast. There are a range of options, from investing-centric podcasts to ones that focus on millennial finance and frugality. Some financial podcasts tackle actionable personal finance advice while others address the broad economic forces shaping our financial lives. Many can introduce you to the concepts and strategies necessary to improve your financial health and interact more knowledgeably with your own financial accounts. If you haven’t already subscribed, consider U.S. News’ Wealth of Knowledge podcast, a weekly podcast featuring tips on money topics, including debt, taxes, investing and budgeting.
Read a personal finance book.
If podcasts aren’t your style, commit to reading a personal finance book this year. Try reading a page per day, and take notes about how you’d like to improve your finances as you make your way through the text, writes Trent Hamm, contributor to U.S. News’ My Money blog. Personal finance books cover everything from budgeting to investing and debt pay off strategies. If you’re trying to cut back on spending, pick up that personal finance book from your local public library, where you can find many free titles and other public amenities, including internet access and e-books.
Fund your health savings account.
Savers in eligible high-deductible insurance plans should consider contributing to their health savings account, or HSA. Doing so is a tax-savvy way to save for future medical expenses. For 2020, HSA contribution limits are $3,550 for individuals and $7,100 for families. A high-deductible health plan has an annual deductible that is not less than $1,400 for individuals or $2,800 for families in 2020. Out-of-pocket expenses cannot exceed $6,900 for individuals and $13,800 for families. Many qualified high-deductible health plans will market themselves clearly as HSA-eligible. If you can’t use an HSA, determine whether an FSA, or flexible spending account, is available through your employer.
Consider these financial New Year’s resolutions.
To review, here are 20 financial resolutions to consider this year. Good luck!
— Identify financial goals.
— Start tracking your budget.
— Check your credit report.
— Commit to no-spend days.
— Get healthy … without joining a gym.
— Boost retirement contributions.
— Fast-track debt payoff goals.
— Cut back on bad money habits.
— Automate good habits.
— Do home maintenance.
— Cut the cable cord.
— Go to the doctor or dentist.
— Evaluate last year’s financial mistakes.
— Rebalance your investment portfolio.
— Assemble your financial team.
— Re-evaluate your employee benefits package.
— Call your credit card company.
— Subscribe to a personal finance podcast.
— Read a personal finance book.
— Fund your health savings account.
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