7 Best Actionable Financial Resolutions

Financial New Year’s resolutions have never been more popular—but, how can you make resolutions that you will stick to? We’ve come up with the top seven actionable financial resolutions that you can start any time of the year.

1. Start an emergency fund

An emergency fund is one of the most important items to tick off your financial checklist. An emergency fund is just what it sounds like—it’s a savings account that you have put money in for emergencies, like job loss or major home repairs. Ideally, an individual should have around six months of living expenses in their emergency fund (or three months if you are in a dual income household). While there are some emergencies that you can prepare for, we experienced unprecedented job loss due to COVID-19, making an emergency fund more necessary than ever.

2. Refinance your mortgage

Mortgage rates are at an all-time low, making it a seller’s market because many who were not financially affected by the pandemic are looking to capitalize on these rates. If you are currently a homeowner, make it a financial resolution to refinance your mortgage this year if you plan on staying in your house for the next five to ten years. Not sure if you should refinance or not? We’ve broken it down for you here, but generally, if you are planning on moving in the next five years or so, stick with your current loan to avoid accruing fees.

3. Pay down your credit card debt

Besides an emergency fund, paying down credit card debt is one of the best decisions you can make when it comes to your finances. Credit card debt often comes with high interest rates and can keep you from achieving financial freedom. Consider using the “snowball method” to pay down your debt. You’ll start with paying off your smallest debts first and then move onto your higher ones. Psychologically, this tends to work better for people in debt. They see their balances going down and will be motivated to pay off their credit card debt.

4. Increase your retirement savings

Time is of the essence for a well-padded retirement account, so the sooner you start saving, the more comfortable your retirement will be. A great financial resolution is to increase your retirement savings this year. If you are currently not saving anything toward retirement, start today. Consider either a Roth IRA or, if your company offers, a 401(k). If your employer offers a 401(k) match, put enough of your paycheck to retirement so that you can get the match. Not taking advantage of your employer’s match is leaving free money on the table.

5. Start investing

It’s true, investing can be scary. Putting your money into the stock market with no guarantee of high ROI is a risk. However, if you make smart decisions, investing can be a lucrative way to obtain some passive income. This is something that you should speak with a financial advisor about. They can help you with risk assessment and determine what investments are right for your situation.

6. Set financial boundaries (especially with your family)

There’s nothing wrong with helping your family or friends if they are in need of financial help, but don’t let them drain you dry. Only give money if you can afford it, and if you are loaning money, do so with the mindset that they will not pay you back. Regardless of if you can afford it not, making financial boundaries with those closest to you will pay off in the long run. Enabling your adult children or other people in your life can endanger your retirement plans. Make the best choices that you can for you and your partner.

7. Plan for self-care

Self-care is all the rage these days and for good reason—taking care of yourself is the best way to stay motivated to reach your financial goals. Remember to put some money aside for self-care, as well. Things like good smelling body wash, a manicure, even a therapy appointment can pay for themselves if it means you are taking care of yourself and more motivated to stay on track.

As we enter 2021, it’s important to do your best to reach your financial goals. We’ve compiled these seven actionable tips to help you start, but you may want to reach out to a financial advisor who can help you along the way.

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