The start of a new year is the perfect time to assess your financial situation and set goals for the months ahead. Whether they’re short-term or long-term, financial goals help give you a clear direction and form the foundation for your financial plan. Here are some practical and achievable financial New Year’s resolutions to help you have a successful year ahead.
1. Create a Budget That Prioritizes Savings
The key to financial success starts with budgeting. A simple approach is the zero-balance budget, where every dollar of your income is assigned a purpose. This method helps you automate your savings each payday. Another popular option is the 50/30/20 rule, which allocates 20% of your after-tax income to savings and/or debt repayment, ensuring that you consistently put money away for the future.
2. Build an Emergency Fund
An emergency fund is crucial for handling unexpected expenses, such as being laid off, medical bills, or car repairs. Aim to save enough to cover three to six months of living expenses. Start by setting a target amount and decide how much you can contribute each month. Then automate your savings into a separate account to make saving something you don’t have to think about.
3. Increase Your Retirement Contributions
Saving for retirement is one of the most important financial goals you can set. Experts recommend gradually increasing your 401(k) contributions each year. For example, if you receive a 3% raise, try contributing 1% more to your 401(k). You’ll still see an increase in your take-home pay, while building a stronger financial future.
4. Pay Down Debt Faster
If you’re carrying high-interest debt like credit cards, student loans, or a mortgage, prioritize paying it off. Any extra funds you receive (like a tax refund or bonus) should go toward reducing your debt. Focus on paying off the debt with the highest interest rate first to save money in the long run.
5. Improve Your Credit Score
Your credit score plays an important role in your financial health. Start by pulling your credit report to check for any errors. You can get a free copy once a year from the major credit bureaus. Regularly monitor your credit score throughout the year to see how your financial choices impact it. Use tools like Credit Score & More from Credit Union of Denver, which allows you to check your score for free every day.
6. Save For Something Special
Saving for a short-term goal, like a vacation or a new car, can keep you motivated throughout the year. In order to stay on track:
- Set a target date for reaching your goal.
- Decide how much you need to save each month or paycheck.
- Open a dedicated savings account to keep the funds separate.
You don’t have to tackle everything at once. The key to achieving your financial goals is to tailor them to your personal situation. Even small changes can have a big impact on your overall financial health, so focus on one goal at a time and continue to build from there. Make this year the start of a more secure financial future.
Credit Union of Denver offers free financial coaching for members, to help you reach your money goals. They can provide a one-on-one consultation to assist you with budgeting, debt, reduction, understanding your credit score, and more. Take actionable steps toward your financial future and book an appointment with one of our certified counselors.