We wish you a very happy new year! As we start the new year, a common topic of conversation amongst friends and family is what resolutions they vow to make in the new year. One of the top kind of resolutions deal with finances in some way, but unfortunately, it’s less common for them to be achieved. Many times, it’s not for lack of trying, but rather the unrealistic nature of the goal. Sometimes the goals are so farfetched or so broad that within the first month of the new year clients have already given up!
If shaping up your spending, saving or investing for 2021 sounds like something you’d like to focus on, here are a few suggestions of attainable resolutions you might want to consider:
Build a solid budget. Trying to achieve financial goals simply cannot be done without one. And achieving this goal has such an amazing ripple affect into so many other areas of your finances. These days there are software programs and apps that take minimal time to set up and essentially do all of the hard work for you.
Pay off high-interest credit card debt. This type of debt carries high interest rates which can result in considerable amount of lost dollars. If you have the means, create a plan that gets the debt paid down or off as quickly as possible. If you don’t have the means, consider options like zero-interest balance transfers or credit counseling services.
Create an emergency fund. Many people find themselves carrying bad debt because they haven’t created a plan for emergency expenses and decide to use a credit card to cover such costs. After your credit card debt is paid off, it’s best to start an emergency fund for unforeseen expenses, such as car repairs, home improvements or health emergencies.
Focus on retirement savings. This is a great resolution to have once you’ve tackled items one through three. Retirement should be the central financial goal in your life no matter the age. Simply starting or maximizing retirement savings options with consistency and as much as your budget allows will put you in an exponentially better place when that time comes.
Work on your credit score. Your credit score is the most important factor in your ability to secure home loan, auto loan and any other types of credit. It takes a lot of time to build, yet very little time to destroy. Make it your resolution to get in the habit of checking your credit score twice a year and researching ways to strengthen it.
Update your will. This is something people tend to create and then forget about it. When in reality, a will should be an ever-changing document that gets updated regularly to reflect every major life event.
We’d love to help you decide which one would be the most beneficial for your financial wellbeing or to help you take the steps to accomplish your financial resolutions. Please let us know how we can help!
All the best,
John J. Barrios, CFP®
Financial resolutions that are actually attainable.
January 12, 2021