New Year, New (Financial) You. How to Set — and Keep — Those New Year’s Resolutions for Your Finances
The rough economy makes it even more important to start off 2023 strong.
It’s almost time to ring in the New Year — and you know what that means. Yup, we’re talking about those annual resolutions.
Ticking off personal finance goals such as saving more and spending less is a great place to start, but it’s worth looking at the broader picture, too. This is the perfect time to go through your finances, assess how the past year went and look at where you want to be a year from now.
This process is even more important right now given the financial stress middle-income Americans are feeling amid the current turbulent economy.
Here are some personal finance resolutions you may want to consider — and how to go about achieving them.
Keep a budget
While it may seem difficult and time-consuming to set up a financial budget, it’s also not rocket science, and you can and absolutely should do it. Setting a budget is simply a plan to help you take control of your spending. Yet, Primerica’s most recent quarterly survey found that less than a quarter (19%) do just that.
Kicking off this process starts with logging how much money is coming in and how much money is going out — and which expenses are essential vs. discretionary. You might just find there are services and subscriptions that you rarely — or never — use, and you can easily put more money in your pocket by hitting cancel.
Reduce credit card debt
With the cost of living rising, middle-income families are relying on credit cards more than ever for everyday expenses. In fact, Primerica’s survey found more than one-third (37%) are taking on more credit card debt, and about one-fifth (21%) are making only the minimum payment each month.
With interest rates rising, it’s vital to pay down this type of debt as quickly as possible. The first step is making sure you aren’t adding to your balance by keeping your spending in check and sticking with that budget you set up. After that, there are several avenues to explore paying down your overall balance, from debt stacking to taking on additional work.
Increase retirement savings
While the current economy may make it tempting to decrease your monthly 401K contributions, this is not the time to make that move if you can help it. Luckily, Primerica’s survey found that most respondents (54%) plan to keep their retirement contributions at the same level. Still, about a quarter (24%) said they plan to put in less money.
Even though the market is currently tumultuous, it still pays to put as much as you can into your retirement account. Remember, the market is cyclical. The economy rises and falls over time, but history suggests you’ll still see a return on your investments in the future.
Save up for a rainy day
While Primerica’s recent survey found that most (60%) middle-income Americans are financially prepared for an unexpected emergency, that still leaves a large number of households without such a fund. Plus, nearly half (47%) had to tap their rainy day fund in the past 12 months.
While these data points are understandable given current economic conditions, they’re also a reason to pause. Having just $1,000 on hand can eliminate a lot of stress when that unexpected expense inevitably pops up. And if you already have that much set aside, it’s worth adding more. You never know when — or what — you could be hit with. While $1,000 is a start, medical, home and other emergencies can quickly escalate.
While you may not want to spend your holidays thinking about your personal finances, taking these proactive steps now is a great way to get 2023 started off on the right foot. Just remember to stick with it and avoid the urge to give up on your financial resolutions in the first few months. While it may be challenging, your financial dreams deserve the effort.