The New Year is an important time to reflect on our financial wellness and resolutions are an easy way to gain clarity on goals we want to reach. As the days grow longer, the need to stay organized, motivated, and financially prepared become increasingly vital. To nourish your financial wellbeing, this article outlines essential financial resolutions you need to stay vigilant over in 2021.
- Create a Financial Roadmap
The best way to assess where you are financially is to create a Snapshot of your financial road map . Begin by writing down your income and bills, savings, debts, and investments. List any tax deductions and credits, income benefits, and other resources. Once you can see a detailed overview of your financial situation, you can strategize and create a plan for improvement.
- Review Your Budget
Creating and reviewing a budget regularly is the core element of any financial roadmap. Knowing how much money comes in and where it goes out is absolutely crucial for keeping your finances organized and under control. Look for unnecessary spending and look into potential budget cuts. Then, set realistic and achievable goals.
- Reduce Credit Card Debt
High-interest credit card debt can be a killer when it comes to financial growth and wellbeing. Reducing and eliminating debt increases your credit score and opens other financial opportunities, such as applying for a car loan or opening a loan. Simply start by reviewing your credit card statements each month, create an achievable repayment plan, and get a second job to help you pay off the balance.
- Calculate Your Net Worth
Calculating your net worth is necessary to know where your finances stand in comparison to other age groups. Run the numbers by subtracting liabilities (credit card debt, student loans, mortgages, etc.) from your total assets (savings, investments, cash, etc.). The result is your net worth. This information is valuable if you want to track your financial progression and make adjustments to financial goals.
- Start Automating Your Finances
Automating your finances saves time and boosts financial opportunity. Automation helps to stay committed to the budget and reduces the chances of overspending. Set up automatic savings deposits, pay bills on time, schedule retirement contributions, and use apps to track goals and limits. Automation also helps to build an emergency fund.
- Invest Wisely
Investing is a major part of financial security, but it’s oftentimes intimidating. Start by making small, manageable contributions to get familiarized with the process. Whether it’s stocks, bonds, certificates of deposit, or mutual funds, picking the right investments is important. Consult a financial professional before investing in any unfamiliar product.
- Manage Your Retirement Savings
Retirement savings are a powerful mechanism of financial growth. Start by understanding the basics of retirement planning. Contribute to employer-sponsored accounts that match your own contributions, and consider opening an IRA or Roth IRA. This ensures that your retirement stays in check and on track.
- Protect Your Identity
Financial literacy goes far beyond the tangible items. Protecting your identity is an important skill that lasts a lifetime. Monitor your credit score regularly, never share personal financial information via email, and use strong passwords. If possible, try freezing your credit and opt out of pre-screened offers to stop potential identity theft.
- Shop Around For Insurance
Shopping around for insurance saves you the most money. Whether it’s car, home, life, or health insurance, shop around for a company that meets your needs without breaking the bank. Request quotes, speak with agents, and compare different types of coverage before settling on the right provider.
- Prepare For An Unexpected
Yet another important financial resolution is to prepare for the unexpected. Financial setbacks, unexpected bills, and natural disasters can happen at any time. The more preparation you have, the better. Create an emergency fund, keep life and health insurance, and maintain a budget so that unexpected events don’t also impact your financial stability in the long run.
Although financial planning may seem overwhelming at first, it’s a process that is achievable and rewarding. The goals you set and actions you take have long-term effects. Start by creating a financial road map, automate your finances, and always be prepared for the unexpected. Take control of your financial health; create resolutions that support your current and future growth and wellbeing. Happy New Year!
