The 1st of January is here, and you probably had time in recent months to take stock of your financial goals. Last year was overwhelming for everyone. And here is a lesson you probably learnt the hard way: everyone needs some savings to endure the worst. Job loss, layoffs, career change... these are the moments when you realize the importance of good budget management. Just like your car or house needs daily maintenance, your personal finances also need to be assessed to run smoothly and get you where you want to go.
So, for this new year's resolutions, here is your financial January to-do list. These New Year's resolutions should be about finances first. In this article, we'll give you some useful tips for financial wellness this year. We will see how to budget and set savings goals. We'll also teach you how to prepare for the future and what financial resolutions you should make and keep for the New Year. Obviously, you don't revolutionize everything in a day. Managing your money better is a little everyday job that produces long-term positive results. From the start of this new year, you should make a long-term plan to stick to bettering your finances. We'll show you how to make this year smoother from a financial perspective. So here are our 12 New Year's financial resolutions.
As we explained in our article on when to review your insurance policy, the start of the year is a great time to review your coverage to ensure your beneficiaries are up to date and that your insurance policy is suitable for any recent changes in your life. So do the update for your beneficiaries on:
- Your life insurance policies,
- Your annuity contracts,
- And other retirement accounts.
If you are in a relationship, talk to your spouse about their group insurance plan.
Have you checked to see if your spouse's insurance plan is better than yours? Perhaps an attached coverage would be more beneficial for you. Also, update postal addresses and ways to contact you.
Doing a financial report for January 1st is the best way to prioritize your savings and plan your spending this year. If you've kept your receipts and invoices, review them. What expenses could you have avoided? What expenses can you reduce? What expenses have actually been investments? What are your sources of income, and what is your average income?
You need to add up your income and subtract your expenses. It is by doing this that you can have your bottom line.
First, look at your spending on contracts you rarely use. If you only use them infrequently, then they aren't necessary.
- How much time per week do you spend watching television? There are a lot of free movies on Youtube - both fiction or documentaries.
- Are you going to the gym? How about putting on a pair of sneakers and going for a 30-minute walk or, even better, a run? You can also find training videos on the internet to practice at home when it is too cold.
- Also, look at your phone usage: how many minutes per month do you spend on the phone? Do you really need a plan with unlimited data? You could very well go for a 1 GB plan and use the Wi-Fi in public places.
- For lighting, have you ever thought of LED lights to replace your bulbs? They can cost $5 and last up to 10 years!
- To reduce your water bill, remember to turn off the tap when you brush your teeth! Small actions can help you to build your financial security!
For other contracts, those that are not essential, close them immediately if possible. If you are bound by termination dates, prepare letters and emails to send them on time. And note these dates in your calendar. You will only have to post them on the agreed-upon day.
Then call the service companies to take advantage of New Years' specials. And even if they don't make any offers, negotiate, ask for a discount!
Paying off your debts should be your other priority at the start of this year. On the one hand, it is a psychological burden that takes a toll on your mind. Then, if something happened to you, you wouldn't want your family to inherit your debts. But we will talk about this further.
Start by paying off your credit cards. Interest rates on credit card debt are so high that they often exceed student loans' interest rates. Your credit card is an expense in itself and is costing you too much. Pay off the one that costs you the least and close that credit card. Paying off that small debt will give you even greater motivation. You can then continue to pay off your next credit card debt at a higher amount. Likewise, close that credit card once you've paid it off. Do not listen to your banker, who will try to convince you of the need for this card. In a few months, when you are down to one, you can then compare credit cards to choose one free of charges or one that provides you with some beneficial rewards.
If you have no debt, consider how you can cut spending using the points on your card: movie tickets, restaurants, gas, cashback points for travel. Take a good look and take your time to compare and make the right choice. Every dollar counts.
Automatization is essential in managing your money better. Automate the debit of a part of your salary on your credit card. You should automatically deposit in your credit account the sum to comfortably repay your credit. By doing this, you avoid accumulating debt again as of late fees.
Then automate the money transfer to your savings account.
At the end of the month, you should be able to sleep comfortably knowing that you paid all your bills, without costing you anything.
Managing your personal finances well also means knowing that you have saved a small amount that will generate interest as soon as you receive your salary.
You can pay for groceries with your credit card as it will earn you cashback. But for other expenses like home decorations or meals at restaurants, in which your credit card doesn’t provide you with additional benefits, pay in cash instead. How do you get used to it? Withdraw a sum at the beginning of the month and keep that amount in your wallet.
Having cash on hand will help you take more control of your spending. When you open your wallet and see the cash decreasing, you realize your spending, and you spend less. You can better visualize how long you can last with this amount. You become more thoughtful in your shopping.
Do you know what government benefits you could receive from your employer? If you have recently changed jobs, you may have the right to receive a pension from your former employer. Now is the perfect time as long as you plan for the future with supplemental retirement plans called annuities. If you are nearing retirement age, learn about the best time to apply for Social Security and retirement benefits. Now is also the time to calculate the retirement you will have: will you have enough for your retirement?
Take a moment with your partner to talk about your finances, goals and the lifestyle you want to live. Including your kids in your meeting about your financial goals can also benefit them and act as a great introduction to proper financial planning. Your family are the people you enjoy life with and who are always by your side. They are also the people you want to protect most in this world. So please include them in your discussions. You will all be cheering each other on, and this support will help you keep the goal in view. You could even make a chart to show your financial goals and let your kids add to it when they make financial improvements.
If you are single, find someone among your friends who will be a real support to you. Tell that person about your financial goals: communication is a form of commitment. Sharing your financial resolutions will force you to stay engaged and persist in managing your budget well.
Finally, start building your emergency fund. It will protect you from both unexpected and great moments in life: loss of a job, the joy of a new child, a move, etc. Only you can decide to be as prepared as possible. Here's how you can get started: First, start with an emergency fund of $1,000 this January. This amount will cover you for unexpected small accidents of life such as a flat tire, your car breaking down, a fine, etc. This account will help you break the cycle of accumulating new debt when trying to eliminate the old one. Then, from February, save at least 10% each month from your income to create a larger emergency fund as the year goes on.
Sometimes, depending on your situation, even this emergency fund may not be enough in the event of a severe blow. In case of an accident, life or disability insurance comes in to support you. Do you have a mortgage? Do you still have debts from your college studies? If something happened to you, would your loved ones have enough to keep the house and their quality of life? Take life insurance into consideration to cover any unexpected event.
Tax season will soon be here, so for good management of your finances and to avoid unnecessary stress, prepare your tax documents. Keep your records in order. Organize them in chronological order, and delete the documents you no longer need after a year.
Find out what documents you can keep for a few years and which ones you should keep for life. Keep these documents in an insulated storage box or, even better, a fireproof cabinet for added security. For your receipts and bills, classify them by month: place all these documents month by month in a pocket in a dedicated binder.
The more you organize your paperwork, the easier it will be to complete your tax return.
After making all of these resolutions and making a few changes, you will probably have a more challenging time sustaining your efforts around March. You might think to yourself what good comes from all this planning? You might say to yourself: Things are better now, I can stop my efforts.
Ignore these thoughts and keep your pace. This commitment you made is not only to yourself but also to your family, and your future. So, persevere.
- Keep recording your expenses to see how you spend your money.
- Keep your family budget up to date on your fridge to convince you to keep up your efforts.
- When you need cash, resist the instinct to dip into your checking account or savings. Think of it as stealing from yourself.
If you have good financial management, and yet you're short of money, it means your income is too limited. To avoid taking in your savings and ruining all your previous efforts. Instead, consider undertaking a side activity. You need to diversify your sources of income.
- Make a garage sale to sell unused items.
- Take on easier-to-do work such as dog sitting or supervising children.
- Consider starting a small business simultaneously, whether for consultancy work or on the internet.
It can also help you pay off debt and build up your emergency fund faster.
So, come back to the beginning of this article and apply all these tips that we have given you. We are delighted to help you manage your finances better and create more security for you and your loved ones. However, no one should act without a thorough review of their situation with a professional advisor regarding protection and investments. Your situation is unique and requires speaking with professional advisors to determine which coverage options are best for you. Please complete our short free quote form to speak to an advisor who can offer you a plan adapted to your situation. We will be happy to answer your questions and to provide you with the most suitable solution!