December 21, 2021 | Tips, Tricks and Member Safety. Share this article:
New year, new financial resolutions
2021 is winding down, and that means it’s time to think about resolutions for the coming year. And what better place to start than with your finances?
More than 92 million Americans are likely to make financial resolutions for 2022, with nearly a third vowing to save more. Vague resolutions can be hard to stick to, however. Instead, here are 8 practical financial resolutions to commit to, along with expert tips on how to keep them.
- Set up autopay: Automating your finances allows you to streamline your accounts and pay your bills without having to think about it every month, saving you time and money in the process. If possible, pay your bills right after receiving your paycheck. Taking care of monthly obligations before indulging in luxury expenses gives you a better sense of what you can truly afford. Using autopay also ensures that you’ll never have a late payment reported to the major credit bureaus, which is one of the easiest ways to damage your credit score.
- Match savings to spending: For one month, try to save as much as you spend. Simply add a dollar to savings for every dollar you spend. If you make a big purchase, you could put a cap on it, such as a certain percentage or flat amount.
- Add one month’s pay to your emergency fund over the next year: An emergency fund is a critical financial tool for dealing with unexpected expenses, such as home or car repairs, unexpected unemployment, or major medical expenses. Most experts recommend having enough money to cover at least three to six months of essential living costs. Use an emergency fund calculator to figure out how much money you should aim to have. Start by opening a dedicated high-yield savings account and consider these tips:
- Evaluate your spending and look for areas where you can save—every little bit counts.
- Set a savings goal.
- Set up automatic contributions.
- Try to increase your contributions over time.
- Monitor your credit reports: As many as one in four people have an error on their credit report that could affect their credit score, according to the Federal Trade Commission. Reviewing your major credit reports regularly enables you to spot signs of fraud before they get too serious.
- Bump up your retirement contribution by 1%: Saving for retirement is one of the most important aspects of a sound financial plan. Investing a few extra dollars per month to your retirement account could pay out big in the end. If your employer offers a 401(k) match, be sure you’re contributing enough to get the full match. Invest in a diverse portfolio to reduce your risk but still achieve attractive returns. Finally, remember that your retirement savings will grow more quickly if you pick a solid long-term plan and stick with it through the good and bad times—especially the bad times. Resist the temptation to sell when the market dips.
- Make Sure You Have Enough Insurance. If there’s anything COVID has taught us, it’s just how precarious life can be. Make sure you and your family have adequate life insurance and that your beneficiaries are set up appropriately. In addition, re-evaluate your car, life, and homeowner’s insurance yearly to make sure you have adequate coverage and that you’re not paying too much.
- Review your subscriptions. The automatic payments you make for subscriptions can eat a hole in your budget if you aren’t careful. Cutting just one $10 monthly service from your budget can save $120 a year. Subscriptions aren’t only for streaming services—these days they can be anything from razor blades to meal plans, so set a reminder to review your subscriptions each year to make sure you’re not wasting your money.
- If you plan to refinance, do it soon. If refinancing is on your agenda, don’t put it off. Interest rates have been at historic lows in recent years, but there are signs – specifically increasing inflation – that interest rates are likely to rise in the near future. It’s best to lock in today’s low rates for mortgages, car loans, and student loan refinancing ASAP.
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