June 25, 2024

8 Financial New Year's Resolutions

New Year’s resolutions are touchy. Some people love them, and others say they aren’t worth the effort or disappointment. But the key to getting them right is expanding your idea of what a resolution is. It’s a goal — and you can set goals any time of year.

As the year unfolds, it's never too late to set New Year's financial resolutions. Embracing new goals can enhance your savings and help you tackle debts to transform your financial future.

Need inspiration? Here are the top eight New Year’s resolutions for personal finance. Plus, learn how good financial goals bring you to a more secure financial future, from budgeting to saving.

Best financial resolutions for New Year

Here’s inspiration for all areas of your financial life — with examples so you can outline your goals with ease.

1. Save more

If you aren’t sure what resolution to make, start with saving. Making a goal to put aside even a few dollars a month can make a difference.

- Set a target. Decide on how much of your income to save each month. Aiming to put aside 10–20% is a good starting point. If this isn't feasible, start smaller and gradually increase the amount.

- Build an emergency fund. If you don’t already have one, creating an emergency fund should be at the top of your list. Aim to accumulate enough savings to cover 3–6 months of living expenses. It’s a safety net for unforeseen financial emergencies, like job loss or unexpected medical expenses.

2. Create a budget

Setting a budget can help you limit unnecessary purchases and stop spending more than you have. It can also allocate the money you need to pay off debts or reach larger goals.

- Analyze your income and expenses. If you’re starting from the beginning, make it a goal to assess your income sources and monthly expenses. Include fixed expenses (like rent/mortgage, utilities) and variable expenses (like groceries or entertainment). Track your spending for a month or two, or even longer, to see where you might need to cut down.

- Categorize and prioritize spending. Group your expenses into categories and set amounts based on necessity. Essentials like housing, food, and bills should take precedence. Then, make categories for things like entertainment and transportation, allocating your leftover cash.

- Use budgeting tools. Have trouble sticking to your budget? Make it a goal to find a budgeting app that works for you. Apps and software can help you track and manage your budget from your phone. Most also provide insights into your spending habits and areas where you can cut back.

3. Improve your credit score

You’re never stuck with a low credit score. Use these goals to slowly but surely build your credit back up or maintain your score if it’s already in a good place.

- Make timely bill payments. Late payments can significantly impact your credit score. Make sure you’re paying all bills, especially credit card payments, on time. Setting up automatic payments can help with this.

- Reduce credit usage. Keep your credit utilization ratio — the amount of credit you're using compared to your credit limit — below 30%. If you’re consistently spending above that, take a break and use your debit account for a while instead. Make it a point not to spend money you don’t have.

- Regularly check your credit report. Monitor your credit report for errors or fraud. Dispute any inaccuracies you find because they can unfairly lower your score. Use a credit monitoring tool like free Credit Monitoring on EarnIn to keep a close eye on your credit score any time, for free.

4. Pay off debts on time

If you’re still chipping away at student loans or have a high credit card bill, make debt payments a priority. The faster you pay them off, the faster you reach financial freedom.

- Prioritize high-interest debts. Focus first on debts with the highest interest rates, like credit card balances. This approach reduces the total interest you pay over time, saving you money in the long run. Just make sure you make minimum payments on other debts to avoid consequences.

- Never miss a payment. Use calendar alerts or financial apps to remind you of upcoming due dates. Timely payments prevent late fees and lead to less interest.

5. Reset your retirement account

It’s never too early to save for retirement. Take the opportunity to open an account or revisit your plans to set yourself up for success down the line.

- Open an account. If you haven’t already, open a retirement-specific account, like a Roth IRA. You don’t even have to contribute every month — just do what you can. Opening the account itself is the first step, and from there, you can set larger goals.

- Increase contributions. Take the opportunity to increase your regular contributions, even if it’s only by a few dollars. This is especially helpful if your employer offers a matching program because it maximizes your cash.

- Start investing. Since your retirement money’s going to sit in an account for a long time, it might as well be an investment account. Investing helps your money grow exponentially over time. The longer you wait, the better the payoff — so start now.

6. Review your insurance policies

Life, home, and disability insurance might seem like extreme measures. But you never know when something could happen. If you don’t have insurance, start now.

- Start small. Find insurance packages that match your current life situation. Factors like marriage, parenthood, or changes in income can all affect your insurance needs, so keep them in mind while exploring. If you’re unsure or can’t spend too much, start with one type that’s important to you and make it a goal to grow from there.

- Shop for competitive rates. A resolution could be to review the market every month or two to make sure you're getting the best rates and coverage. Insurance needs can change over time, and so do insurance products.

7. Start or increase investing

No matter who you are, what you do, or how much money you can afford to save, you can start investing. Use the new year to talk to your bank and decide on a game plan.

- Begin with low-risk investments. If you're new to investing, start with low-risk options like mutual funds or exchange-traded funds (ETFs) that track major indexes. Then you can get more comfortable with the process and seek more risk.

- Set clear investment goals. Your savings goals guide your investment strategy, so decide what the money is for. It could be retirement, a home, or education — you name it. Setting specific monthly or yearly goals helps you see the road ahead more clearly.

- Diversify your portfolio. Spread your investments across various asset classes to mitigate risk. A mix of stocks, bonds, and funds can balance your portfolio and save your money in case anything happens.

8. Educate yourself financially

Learning more about the financial world sets you up to make informed decisions. Here’s how to keep up with the news and slowly become more confident and financially literate.

- Read financial literature. Read financial books, magazines, and online articles to stay informed about personal finance and investment strategies. You could make it a goal to read one book a month or subscribe to a finance newsletter.

- Attend workshops and seminars. Participate in financial workshops or webinars. Many financial institutions and community organizations offer free or low-cost events, so attend regularly and learn more every time.

- Hire an advisor. Make room in your budget to work with a financial advisor. You could meet every month or even once a year — it depends on your needs. The point is to have someone you trust who can offer guidance on saving, investments, and big purchases.

How to keep your New Year's financial resolutions

Maintaining your financial resolutions requires discipline, strategy, and adaptability. Here are four ways to ensure your goals for the New Year translate to achievements:

1. Set clear, achievable goals. Define specific financial goals, like building a $5,000 emergency fund or reducing credit card debt by 10% every month. Vague resolutions are harder to follow through.

2. Be realistic. It’s tempting to dream up big numbers or spread out your finances across a bunch of different goals. But sometimes, you need to keep it simple. Be realistic about what resolutions you can afford to make, and don’t bite off more than you can chew. Your wallet will thank you.

3. Track progress regularly. Use budgeting apps to monitor spending, saving, and debt repayment. Regular check-ins keep you accountable and allow for timely adjustments.

4. Seek professional advice. Consult a financial advisor for personalized guidance, especially for complex retirement savings or investing goals. It never hurts to have that extra set of eyes. And no matter how informed you are, an advisor always knows more than you.

Reach your goals with EarnIn

When it comes to meeting financial goals, sometimes you need a boost to stay on track. If you need to access your pay right away — without the interest of a loan or the high fees of a cash advance — use EarnIn.

The EarnIn app offers powerful tools to give you a new set of options with your money. The Cash Out tool lets you access your pay as you work — up to $100 a day and up to $750 every pay period — so you have what you need to keep moving forward, whether it’s January or July.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

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