Easy Financial Resolutions To Make For The New Year
As you enter the new year, it’s time to make a resolution to make this coming year your best one yet!
While many people choose to get fit, try a new hobby, or to read more, choosing to focus on improving your finances can have a lasting impact on your future.
KEY TAKEAWAYS:
- Set realistic resolutions to ensure you stick with them.
- Monthly check-ins will help maintain accountability.
- Focusing on financial health now is the best way to plan for the future.
Getting Started On Your Path To Financial Health
When it comes to financial health, the biggest challenge is knowing where to start.
The New Year offers an excellent opportunity to evaluate your finances and develop a plan for success.
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While it may be tempting to jump head first, taking baby steps is the most effective way to make lasting changes without feeling overwhelmed.
Before you begin, it’s important to accurately assess your financial situation.
You can start by determining your net worth, calculating your debt, listing your assets, and analyzing your spending habits.
Once you have a thorough understanding of your entire financial situation, you can decide what steps you need to take to plan for the future.
Let’s explore some easy-to-implement financial resolutions you can implement that will help you on your path to financial health and security.
Assess Your Retirement Funds
Checking in on your retirement accounts once a year is a good way to see how they are going. If you have an employer-sponsored 457 plan, 403(b), or 401(k), increasing the amount you put into your account each month can pay dividends in the future.
If you have enough room in your budget, adding an individual retirement account or IRA, is another easy way to save for retirement. Let’s explore how to get the most out of each of these accounts.
IRAs
IRAs offer an additional retirement savings option, even if you already have a retirement plan with your employer. You are allowed to contribute to either a Roth IRA or Traditional IRA as long as your total contributed amount exceeds your taxable wage or new income from self-employment.
If you are over 50 years old, you are allowed to contribute an additional $1,000 per month for a total contribution allotment of $7,500 or $625 monthly for all of 2023. This amount is an increase of $500 from 2022, where contributions were capped at $7,000 or $583 a month.
It is important to note that for 2023, single filers earning a modified adjusted gross income of $138,000 – $153,000 and those filing as married filing jointly earning $218,000 – $228,000 will be in a phase-out range for Roth IRA contributions.
Traditional IRAs may also have contribution limits if you have an existing work retirement plan or certain income restrictions.
Employment Plans
If you have a 457 plan, 403(b), or 401(k) through your employer, consider contributing as much as is financially comfortable. All plans have a maximum contribution allotment for the year, and ensuring you reach this number is the best way to get the most out of your account.
If you are over 50 and behind on the maximum contribution allowances, it is possible to make catch-up contributions. The goal is to get the most out of your employer’s matching yearly contributions.
Reduce Credit Card Debt
Credit card debt can create a chokehold on your life, with high-interest rates and minimum payments making it virtually impossible to pay off your balance.
The first step is determining how much you owe on each card, including the interest rate it charges.
Once you know the total balance, you can determine how much you can afford to pay, focusing on the highest interest-rate cards first, which is known as the debt avalanche method of paying off debt.
One way to pay down your balances faster is through a balance transfer, which allows you to pay off your higher interest-rate debts by transferring them to a card with a lower rate.
Pay Down All Existing Debts
Along with your credit cards, lowering your overall debt is an excellent New Year’s resolution.
Assess all of your outstanding debts, including student loans, mortgages, car loans, and more, and consider paying more toward the principal.
Making extra payments on the principal reduces the amount you pay on the interest each month, ensuring more of your money goes towards paying down the debt and not into the wallet of the lender.
Monitor Your Credit Report
Your credit report is a direct reflection of your overall financial health.
It tells you if you are behind on payments, how consistent you are at making payments, and your overall debt-to-balance ratio.
Monitoring your credit score is also one of the best ways to ensure no fraudulent accounts are open in your name, which can wreak havoc on your life.
Everyone is entitled to three credit reports yearly, and many credit monitoring companies will allow you to check your score as often as you like without negatively impacting it.
Reviewing your credit report and monthly credit score monitoring will increase your personal financial IQ and make it easier to take control of your overall finances.
Update Your Investment Portfolio
Updating your portfolio with your financial advisor will help you lock in gains and analyze any underperforming sectors.
Since the stock market is constantly changing, it’s important to analyze your portfolio’s performance and make any necessary adjustments.
Be sure to consult with your financial advisor before making any large changes to ensure you are making the wisest decisions for the current and future market.
Analyze Your Savings Plan
Take time to analyze your savings plan and update it to reflect your goals.
If you’ve accessed these funds throughout the year, consider how you can reinvest into them to get back on track and limit losses.
One way to increase your savings is through direct deposits and having a specified amount go directly into the account each month.
That way, you aren’t tempted to spend the money, making it easy to grow your savings quickly.
Final Thoughts On Financial Resolutions To Make For The New Year
The New Year offers an excellent opportunity to evaluate your finances and develop a plan for success.
The good news is that your plan doesn’t have to be elaborate to start. Focus on what you can do, and then continue to build on your success!
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As America’s trusted source for debt relief solutions, we aim to empower you with financial knowledge that can lead to informed decisions, whether it’s about savings, investments, or managing debt.
If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider a FREE consultation call with one of our certified Debt Consultants, who can provide personalized debt relief advice tailored to your specific needs.
By taking proactive steps today, you can put an end to your financial stress and work towards a brighter financial future.
Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.
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