9 Financial Goals for the New Year

The start of a new year is a hopeful time. In 2022, as the pandemic wanes and life settles into its new-ish normal, it’s a chance to give yourself a fresh start and make life changes that will serve you in the future. It’s also the perfect time to take a look at your finances and set some new financial resolutions.

Not sure where to begin? We’ve got you covered.

1. Create a Personal Budget

A fresh new year introduces a great opportunity to create or revise your personal budget. The first step to establishing your personal budget is to write down your take-home income and your monthly expenses. Monthly expenses can include your rent or mortgage payment, insurance payments, utility bills, subscription services, daycare costs and any other major monthly bills. You'll also want to factor in an estimated budget for things like groceries, gas or public transportation, clothing, and other costs.

Once you have all your expenses written down, you can “assign” money to the appropriate categories and then see how much of your income you have left. You may want to consider setting aside some of the remaining money for other goals, such as saving up for a down payment on a home or car.

To simplify the creation of your budget, you can utilize budgeting apps such as Mint and You Need a Budget (YNAB).

2. Start Saving Money

For some people, evaluating your finances and personal budget might bring about the desire to make more money. Boosting your income and creating a personal budget go hand-in-hand and can help you put an end to a paycheck-to-paycheck lifestyle. Cutting back on your spending is usually not as hard as it sounds in the short term either. Canceling unused subscription services, cooking at home instead of eating out and canceling your gym membership in favor of working out at home are all good ways to start saving.

In addition to implementing small changes, it might be time to consider ways you can make bigger moves. Consider asking for a raise, looking for a new job, or even taking up a side hustle to increase your income stream.

3. Pay Off Credit Card Debt Entirely

There are a few ways you can tackle your credit card debt. First, it's important to make sure you're at least making the minimum payment on each card every month. On top of minimum payments, you'll want to pay off the entire balance of at least one card. Some people like to choose the card with the smallest balance and pay that one off first. Other people might prefer to choose the card with the highest interest rate to reduce the total amount of interest that you're paying.

If paying off your credit card debt feels unattainable using those methods, research consolidating your debt. Some credit cards offer a low balance transfer rate, which you can take advantage of. To do this, you'll transfer the balances of all your credit cards to a single card. You'll need to pay balance transfer fees, but you'll usually still save more overall because of the lower interest rate.

4. Pay Off Student Loans

It's no secret that many Americans are weighed down by student loan debt. Most of us acquired our student loans when we were fresh out of high school and didn't really have a handle on money management. If you're in a position to pick off your student loans using the same methods recommended to pay off credit card debts, that's great! But if eliminating your student loan is more of a long-term goal, you might want to consider refinancing. By refinancing your student loans, you'll be able to consolidate your federal and/or private loans into a single payment. The student loan interest rates that were available years ago are all over the map, so chances are you'll be able to get a lower interest rate and a regular, fixed payment.

5. Improve Your Credit</h2>

When's the last time you checked your credit report? If you can't remember, you're not alone. According to one report, 46% of Americans have not checked their credit scores in more than two months. And since your credit report is what lenders look at to determine your financial health and reliability, it's important to keep an eye on it.

If you're planning to buy a house or a car at some point, improving your credit might be one of your top long-term goals. Not only can a good credit score improve your odds of being approved for a loan, but it can also help you save money because you may get lower interest rates.

Checking your accounts and reviewing your payment history can be a good place to start. Most credit card companies also offer cardholders free credit reports which can give you advice on how to improve your score, such as making on-time payments and paying off your balances. Finally, reviewing your credit report regularly can help you see if there are any fraudulent charges that are hurting your score.

6. Minimize Your Possessions

Have you ever looked around your room and thought about how much stuff you've accumulated? If so, you might want to consider embracing minimalism by selling some of your belongings. Not only will this create more space in your home, but it can also bring you a little bit of extra money, even if it's only in the short term.

There are several places where you can sell your unwanted things. For clothing, you can stop by your local second-hand clothing store or list the items on sites such as Poshmark and Mercari. Larger items that you don't want to ship can be listed locally on Craigslist or Facebook Marketplace. And then, of course, there's always good old eBay!

7. Build an Emergency Fund

You never know when a financial emergency might come up, so building an emergency fund can be a great New Year's resolution to set you up for the new year and beyond.

An emergency fund should be kept separately from your regular savings account and left untouched unless an unexpected emergency occurs. You can work an emergency fund into your personal budget by setting aside a certain amount of money each month to go into the emergency fund account. That said, you'll want to make sure you balance it out with your other expenses and financial goals.

There is no set amount of money that you should have in your emergency fund. Most personal finance experts recommend having an amount that is equal to three months of your income set aside. But that won't happen overnight, and for some, it's an unachievable goal. Even as little as $100 can be useful if you need it. Just make sure you don't tap into your emergency fund unless it's a true emergency, such as an illness or unexpected car or home repair. As the COVID-19 pandemic has taught us, life can change in an instant, so it's a good idea to have some savings set aside for the unknown.

8. Save for Retirement

No matter how far off retirement seems now, it's never too early to start thinking about your retirement savings. For some, this might be right at the top of your financial New Year's resolutions. If you work for an employer, you may have access to employer-sponsored savings plans such as a 401(k) and Roth 401(k). Some employers will contribute a certain percentage of your salary into your retirement account either on their own or to match what you contribute. Be sure to ask about your employer's policy to make sure you're getting the most out of your account.

If you're self-employed, you'll have to handle your investment account, most likely by using an Individual Retirement Account (IRA). You can open an account through a bank, an online brokerage or an investment company.

9. Contribute Toward Your Family's Future

If you have a spouse and/or dependents, one of your savings goals may be to ensure they will have financial security no matter what happens. By buying a life insurance policy, you can have peace of mind knowing that there is a financial plan in place to take care of them if you pass away.

Life insurance works like any other type of insurance. You'll choose the amount of coverage that you want based on your family's needs and pay an insurance premium to keep the policy active. You'll also designate one or more beneficiaries who you want to receive the money from the insurance policy in the event of your passing.

How to Stick to Your Financial New Year's Resolutions 

We've all done it before: set lofty goals during the holiday season, but then struggle to keep up with them once the monotony of work and household chores sets back in. That's why it's important to not only make goals but also implement a financial plan that helps you stay on top of them.

Set realistic goals

The new year is a chance to position yourself for success by setting goals that are realistic. For example, if you order take-out every night, you can't expect that you'll suddenly stop doing it on January 1st. Instead, aim to start small by trying to cook a new recipe at home a few times each week. You can always adjust your goals as you get an idea of what works and what doesn’t.

Set up auto-pay

If you're the type of person who has a hard time keeping track of due dates for your bills, you can avoid late fees by setting up auto-pay from your checking account. With your personal budget in mind, you can make sure you have enough money in your bank accounts to cover all of your monthly bills without having to give it excessive thought. But just remember what you're paying for. If you set up auto-pay for things like new subscription services, it can be easy to forget that they exist.

Buddy up with a friend

Don't be afraid to ask your friends if they want to be an accountability buddy who can help you stay encouraged on your quest to improve your financial life. If you're trying to save money on your gym membership, for example, set up your own fitness classes by doing at-home workouts together. Or, if you want to go all-in, pick out a money-saving challenge for both of you to try.

Remember, your financial goals for the new year don’t have to be anything big. Starting small is perfectly fine and might even work out better. Below are some key takeaways:

• Be honest with yourself and set realistic goals, even if it means taking baby steps to reach your full goal.
• Create a plan to help you stick to a goal, including a personal budget that helps you keep track of where your money is going each month.
• Set yourself up for success, whether that means automating your finances or partnering with a friend who can help you reach your financial goals.

No matter what you're hoping to achieve, we're here to help you succeed in 2022 and for many years to come.

The content provided is for educational and informational purposes only and does not constitute financial or legal advice. RISE is not acting as a credit counseling or repair service, debt consolidation service, or credit services organization in providing this content. RISE makes no representation about the reliability or suitability of the information provided – any action you take based on this content is at your own risk.