Including Finances In Your New Year Resolutions

January 27, 2016


It’s January and everyone is making resolutions. Sure, exercising and eating right are definitely important, but your financial well-being is no less important. Here are a few long-term resolutions to keep this year:

Get Life Insurance

If you have a family or anyone depending on you, you want to make sure you have life insurance coverage. Premiums differ depending on the type of coverage you get and other factors such as your age and health. There are various types of policies available and the option that may make the most sense for you depends on your particular circumstances. When determining the amount of the life insurance you 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 are 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), take them up on it. The employer match is basically free money going into your retirement fund. If you can, contribute at least the minimum to get the match. Be aware, the IRS has limits on what you are allowed to contribute to these accounts.

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.

  • Do you have a cable plan that includes all premium channels and four receivers while you generally just watch Netflix? Cancel it.
  • Do you pay for a landline just so telemarketers can interrupt your dinner? Get rid of it.
  • 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 of trimming your expenses but they really do make a difference to the bottom line. Take stock of all your monthly bills and find out where savings opportunities may hide.

Make Sure You Have an Emergency Fund

Almost one of out every three Americans does not have any kind of emergency fund set up. When emergencies come up, many rely on credit cards or help from family or friends. Start saving now for that rainy day and hopefully you will never need this cushion. But if you do, it may be a lifesaver. How much do you need to have in an emergency fund?  Generally, you need to have saved up at least three months of your non-discretionary living expenses, but six months 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 another topic no one wants to think about but it is of key importance. Ensure that you have all your critical 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 give you piece 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 going out to eat? Try to plan out your weekly menu at the beginning of the week through a weekly meal planner like Cooking Light. You can plan out your meals and do all your weekly grocery shopping at once as well, saving you from multiple trips to the store and mid-week pizza deliveries.

Finally – Set Goals for the Year

No goal is too small when it comes to finances. Review your credit card statements and your bank account statements for the past year to determine where you may be able to cut down on expenses. You may not think that you are spending too much money on going out to eat until you add it all up for the month, or even for the year. 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 may be 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.