Including Finances in Your New Year's Resolutions

January 8, 2019

It’s January...a.k.a. New Year's resolution season. While taking care of your health and physical wellness might be at the top of your list this year, how about making your financial wellness a priority as well? Here are a few long-term financial resolutions to keep this year:

Get Life Insurance

If you have a family and/or dependents you're responsible for, you will want to make sure you have life insurance coverage. Premiums differ depending on the type of coverage, as well as personal factors like your age and health. There are various types of policies available, but the option that makes the most sense for you will depend on your particular circumstances. When determining the amount of life insurance you will need, your best bet is to use a life insurance calculator. These calculators use a series of questions about your current financial circumstances to determine the optimal amount of life insurance you should obtain.

Consider Your Retirement

Do you contribute to a 401(k), 457, or other voluntary retirement vehicle? Take a look at your budget to determine whether you can start making contributions into these vehicles, or, if you're already contributing, whether you are contributing in an optimal way. For example, if your employer offers a match and you can afford to contribute to a 401(k), by all means, take advantage. The employer match is basically free money going towards your retirement. If you can, contribute at least the minimum to get the match. Be aware, however, that the IRS has limits on what you are allowed to contribute to these accounts, so be sure to arm yourself with the latest numbers for 2019.

Review Your Budget

The beginning of the year is an opportune time to take a comprehensive look at your budget. Look closely to see if you are paying for any unnecessary expenses.

  • Are you still paying for cable? Consider cutting the cord once and for all
  • Are you paying for more data than you currently use? Contact your mobile provider to see if you can scale down your plan
  • Have you recently received an auto insurance quote to see if you qualify for lower premiums? Follow up and make a change if possible.

These are easy ways to trim your expenses, but they really can make a difference on your bottom line. Take stock of all your monthly bills, and find out where savings opportunities may be hiding.

Make Sure You Have an Emergency Fund

Living in a society that encourages spending, it can be difficult to remember the power of saving for that rainy day...or that unfortunate hardship. But while no one wants to think about the unexpected, when/if it happens to you, the last thing you'll want to worry about is how on earth you're going to pay for [insert emergency need] without going into debt. Spare yourself the future stress, and start putting money into an emergency fund today. How much should you save? Generally, you should have enough to cover three months of living expenses, but six months' worth is optimal. Try an emergency fund calculator to see how much you should be saving.

Ensure Your Estate Is In Order

This, like life insurance, is something no one wants to think about thathappens to be of critical importance. Ensure that you have all your important documents gathered and in one place where family members can find them. Think of these important questions:

  • Are all your legal documents in order?
  • Do you have a current will?
  • What about a valid and enforceable POA (Power of Attorney) designation?
  • Have you discussed Advanced Care Directives with your family?

An annual review of your estate will ensure that your affairs are in order, and will go a long way in providing some peace of mind.

Change Your Actions

All of us tend to be set in our ways, and that applies to how we spend money as well.

  • Do you tend to make impulse purchases at checkout? Bring a list to the grocery store and stick to it.
  • Do you shop online because there is a sale, but not because there is anything you actually need? Unsubscribe from store email alerts and set a monthly budget for non-discretionary purchases.
  • Do you want to try curbing how much you spend on eating? Try to plan out your weekly at-home menu with a meal planner like this one from Cooking Light. You can plan out your meals and do all your weekly grocery shopping at once, saving you from multiple trips to the store, as well as last-minute mid-week pizza deliveries.

Finally – Set Goals for the Year

No goal is too small when it comes to finances. Review your credit card and bank account statements from the past year to determine where you may be able to cut down on expenses. You may not think you're spending as much as you are until you see the totals in black-and-white. Some credit cards offer online tools that classify your spending by type of expense (i.e. grocery, gas, entertainment, etc.), making it easy to see where you are overspending. Whether your goal is to contribute a little bit more into your retirement account, or save for an anniversary trip, planning early and taking a comprehensive look at your budget will help you achieve your end objective.