Whether it’s getting in shape, setting financial goals, being more charitable or being more environmentally responsible, we all begin the New Year with improvement goals. Unfortunately, many of these noble resolutions don’t last the winter, especially if we set the bar for success too high. According to U.S. News, 80% of New Year’s resolutions fail by February.1
So, how do we make New Year’s resolutions that we can actually stick to, especially when it comes to our financial aspirations?
While we can’t help you with a meal plan or gym routine, Misty Lynch, CFP®, John Hancock’s Head of Financial Planning, developed a list of simple strategies you can use throughout the year to help you make and keep your financial resolutions beyond the ball drop.
1. Reflect on Your Spending
Looking back at your year in spending is one of the best ways to consider what you might do differently with your money in the next year. Whether it’s spending less, saving more, rolling over an old 401(k) or even hiring a financial advisor, tracking last year’s spending is the crucial first step in successfully sticking to a financial resolution.
2. Set a Savings Goal
Whether it’s starting a business, furthering your education, or just building a rainy-day fund, it’s important to set a target for how much you need to save monthly in order to comfortably reach your primary financial goal. Knowing that number can give you peace of mind and allow you to set a realistic budget as you make spending decisions year round. A great way to stay on track with your savings and budget is with a budget plan; the 50-20-30 rule could become your new best friend in the New Year.
3. Maximize Your Assets
As this year turns into the next, try not to leave any money on the table. Max out contributions to your 401(k), take all of your remaining vacation days, and take a good look at your benefits to cover all the bases. In recent years, Americans forfeited more than 200 million vacation days annually, giving up about $66.4 billion in lost benefits.2 Make the end of each year the time you get the most out of your hard-earned dollars.
4. Re-evaluate Your Current Finances
Aside from spending time with loved ones during the holiday season, it’s also a great time to re-evaluate some of the things you’re currently spending money on. For example, car insurance companies change their rates monthly, so by shopping around for a new plan at the end of the year, you’re more likely to find a cheaper rate.3 Whether its insurance, employee benefits, or subscription services, now is a great time to evaluate what is still worth spending money on, and figure out what in your budget can be reduced, replaced, or eliminated.
5. Plan to Pay Down Debt
Whether you’re utilizing online tools, taking advantage of free calculators, or finally speaking with a financial advisor, it’s a good idea to go into next year with some long- and short-term plans to pay down any debt you may have. Everyone’s financial circumstances are different, so be sure to choose a plan of action that’s best for you.
Whatever your financial goals are for the coming year, don’t try to tackle them all at once. The best resolutions are the ones you stick to, and that takes time. If you have questions or want further advice on how to make—and keep—your financial resolutions, a financial advisor can help.