Financial Resolutions for the New Year
As we say goodbye to 2021 and welcome the new year, over 90
million Americans will be making New Year's resolutions. Some of the more
common resolutions will be financial in nature, whether it's to save more,
finally start investing, or perhaps open that college savings fund for the
kids. If this is the year you finally commit to your financial goals, or maybe
you didn't achieve your financial resolutions last year, the following list
will help to give you direction and momentum you need to make 2022 a successful
one.
Make a Realistic Budget and Track It
Americans are on pace to end 2021 with over $950 billion in
credit card debt, which makes sense considering less than 50% of adults have a
budget in place. With interest rates expected to increase in 2022, there's
never been a better time to get your cash flow in order and reduce your
dependency on debt. Start by taking an average of your last 3 months expenses
and prioritizing items based on importance. Housing, food, and healthcare are
typically at the top, followed by things such as utilities, vehicle payments
and entertainment. There might even be low hanging fruit like monthly
subscriptions that are little used and can be eliminated.
Build Up Emergency Savings
Now that your budget is in place and you have positive cash
flow, it's time to begin building up your emergency fund. This is the
foundation that all other financial decisions are based upon. The typical
recommendation is to hold 3-6 months expenses in a savings account at the bank,
although you might be more comfortable with up to a year's worth of expenses
tucked away. The next unplanned expense is right around the corner, and without
the necessary funds in place you might be forced to add thousands of dollars
back onto that high interest credit card.
Sign up for Your Company's 401(k)
If your employer offers a 401(k) and you are not
participating in the plan, you might be leaving money on the table in the form
of your employer match. Most financial planning studies recommend that you
contribute at least 15% of your gross income to a 401(k), but if you don't feel
like that is realistic at this point, at least contribute enough to get your
full employer match.
Make Sure You Have the Proper Insurance in Place.
It's probably been a while since you have reviewed your
insurance. Now is the time to make sure you have the proper amount of life and
disability insurance in place. As Covid has shown us, life can be precious and
unpredictable, and it's important to have this coverage in place now to protect
yourself and your loved ones. It would also be wise to review your home, auto
and any other valuable possessions that are insured to make sure that the
proper amount of coverage is in place. You might even be able reduce your
payment through another provider, freeing up more cash that can be used towards
your financial goals.
Securities offered through Kestra Investment Services, LLC
(Kestra IS), member FINRA/SIPC. Investment advisory services offered through
Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen
Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra
AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures