Although many people feel that New Year’s celebrations are a bit of a letdown after the magic of Christmas, I personally love the New Year holiday. New Year’s Eve and New Year’s Day symbolize a new chapter in our lives and provide us with a landmark by which to measure our progress with our goals.
You may or may not be the sort of person who makes New Years Resolutions, and even if you do you may not always find it easy to stick to them throughout the year. Resolutions can be daunting. That’s why it is important to create reasonable goals for yourself and to set milestones throughout the year so that you can easily keep track of your progress.
If you are planning to make New Year’s Resolutions, it’s important that some of those resolutions are financial. The New Year offers us a chance to reflect, reset, and think about our opportunities for growth over the next year. To give you some ideas, here are some of the best New Year’s money resolutions you can make in 2022.
Set a Specific Monthly Savings Goal
Saving and investing your savings is the lifeblood of any New Year’s money resolution. Learning to save for a rainy day is a simple lesson many of us were taught when we were just kids. This lesson is no less true now than it was then, although you may be saving for more than just a rainy day now.
Whether you need to build up your emergency fund, increase your retirement savings, set aside money for your kids’ college funds, or all of the above, make a plan for how you can incorporate intentional savings goals into your New Year’s money resolutions.
Take a look at how much you were able to save each month last year and try to find a way to increase the amount. Be specific about how you will do this. You can start by thinking about what you realistically expect to change or stay the same in regards to your financial situation in 2022.
Will your income increase? What about your partner’s income? Did you have a small accident last year that may result in higher car insurance premiums this year? Will that impact your ability to save more each month? Did you have any expenses this year that you won’t have next year? Use your anticipated changes to inform realistic, specific savings goals.
New Year’s Money Resolution Idea: “I will increase my monthly savings for emergencies or investments by $___ each month in 2022 for a total savings of $___ per month.”
Make A Plan for High-Interest Debt
High-interest debt plagues millions of Americans, which makes debt repayment the perfect New Year’s money resolution. The most insidious debt comes from that little plastic rectangle in your wallet, although other high-interest debt may include auto loans, student loans, or personal loans.
If your high-interest debt is sizable—or if you want to start paying down your mortgage more quickly as you near retirement—make a plan for how you’ll pay that debt down in 2022. Resist the temptation to set a vague resolution to pay off the entire balance or a certain amount by the end of the year. A resolution like this can be quickly overlooked or put on the backburner.
Instead, look at your monthly budget and set a realistic goal for how much you can pay toward the debt each month. As the year wears on, you may need to adjust your monthly payment up or down depending on how your circumstances change.
New Year’s Money Resolution Idea: “I will pay $___ toward my debt balance each month.”
Research A New Financial Concept Each Month
Financial services professionals are here to help you manage your wealth and make an informed, strategic plan with the aim of reaching your life goals. But you want it to be a two-way discussion, and knowledge is power. So help your advisors help you: Resolve to learn one new financial concept each month.
What is your current knowledge level when it comes to your own personal finances? Do you know how to weigh the pros and cons of different financial decisions? If you’re reading this, your level of personal finance knowledge is probably already higher than average. But that doesn’t mean there aren’t interesting new concepts to learn.
Here are a few online resources for the lifelong personal finance student:
- The Caviness Wealth Management Blog publishes interesting articles on topics like early retirement, traditional vs Roth IRAs, and the benefits of working with a Certified Financial Planner.
- Investopedia is just what it sounds like: the Wikipedia for all things finance. It’s a fantastic resource for getting the basics of any new financial concept, and it provides links for more in-depth reading.
- Nerdwallet has a well-designed website that provides background information on everything from personal loans to travel. They also have an array of useful calculators such as this capital gains tax calculator to help you anticipate specific scenarios.
Read widely. Personal finance is interesting in its own right and we should think of it not with dread, but with enthusiasm. After all, New Year’s money resolutions should be positive! If reading isn’t your thing, find a podcast or subscribe to a YouTube channel. There are tons available that provide education about a variety of financial topics.
Of course, as with all online materials, be wary of when you’re receiving advice from non-experts. It’s always best to review unfamiliar concepts or questions with a trusted advisor who knows your specific situation.
New Year’s Money Resolution Idea: “I commit to learning one new financial concept each month, and to talk with my advisor about how each may be relevant to my family.”
Diversify Your Portfolio
Inflation fears are causing many people to have sleepless nights, especially those looking ahead to retirement, so it has never been more important to properly diversify your portfolio. You want to make sure that you are as prepared as you can be to meet whatever changes 2022 brings, so one of your New Year’s money resolutions should include diversification for the current economy.
Avoid taking unnecessary risks—risks posed by a specific industry or company—without first doing your research and communicating with your advisor. Although all investments carry some inherent risk, there may be investment opportunities that are better suited to your goals, circumstances, risk tolerance, and financial preferences than others.
Before taking the simple route and investing in all the same things as your brother-in-law, take the time to speak with a fiduciary financial advisor about your New Year’s money resolution to properly diversify. A fiduciary advisor will get to know your specific situation and goals before making any recommendations.
New Year’s Money Resolution Idea: “Discuss how to rebalance or diversify your portfolio with a fiduciary financial advisor in the first quarter of 2022.”
Make A New Year’s Money Resolution To Talk With Caviness Wealth Management
New Year’s money resolutions shouldn’t be tackled alone. You want your goals to work for your family in 2022, not against them.
At Caviness Wealth Management, we are a fiduciary firm that always puts your best interest first. We work to understand your specific needs and goals and endeavor to help you chart the path most likely to help you achieve the future you envision. If you’d like to discuss your questions and financial goals, click here to schedule a conversationtoday.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.
Information on linked 3rd-party sites and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment, tax, or legal advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
