What’s Your Financial New Year’s Resolution?
Happy New Year! January is the month of resolutions as we all set goals and map out how to achieve them through the new year. After a year like 2020, it’s not surprising that physical and financial wellness are at the top of many people’s minds when setting 2021 resolutions.
In fact, Offers.com found in a survey that 27 percent of people plan to save money or get out of debt as their resolution. Only losing weight was a more popular answer. But even a seemingly simple resolution like “save money” is far easier said than done. However, your financial resolution can be achievable, and 2021 can be the year you get control over your money.
To help set you on the right path, we spoke to everyday Americans and industry experts to hear their financial resolutions. Hopefully, their strategies and guidance can help inspire you to set an ambitious money goal in 2021.
Beginning With Budgeting
It’s really hard to make progress saving money without some form of a budget. Even if budgeting isn’t your priority in your financial new year’s resolution, making a budget will likely be a big help in accomplishing your goal. In many cases, setting a budget is the first step toward getting out of any financial difficulties.
For instance, Marcos Martinez started 2021 with a 2022-facing resolution – he plans to buy a townhouse next year. To accomplish this, Martinez said he needs to focus on saving and getting out of debt, and he’ll be using Dave Ramsey’s EveryDollar budgeting app to help. Although the year is still young, Martinez’s budget has helped him make progress already.
“I enjoy shopping and eating out but this year I’ll cut back on those activities,” he said. “I’ve already begun meal prepping which has saved me a lot of money.”
Even if you already have a budget, the new year is a great time to rethink your strategies. You might think, like David Meltzer – CEO of Maryland-based East Insurance Group – that you should think of the big picture, and plan your budget long-term.
“I’d like to start off by setting an annual budget, which will include both earnings and expenses,” Meltzer said. “I am aware that things may change along the way, but having that rough guide will also condition your mind to stay on track and not spend anything unnecessarily.”
On the other hand, you might need to focus on the short-term to see better results, like Marius Thauland. As opposed to the monthly budget he’s been working with, Thauland plans to switch to a weekly system in 2021, hoping to stay more on top of his money.
“Most people fail with budgets because they don’t look at their budgets often enough,” he said. “If you plan to spend five minutes a week checking your budget, you will end up hitting your New Year’s resolution.”
Regardless of the challenges you face, finding a budget that works for you is a major step toward financial security in 2021.
Building an Emergency Fund
This year, many Americans found themselves less financially secure than ever. Not because something happened, necessarily, but because of what could happen. Jobs could evaporate and medical bills could stack up for anyone, out of nowhere.
“We’ve dealt with a lot of uncertainty this past year and that looks set to continue in 2021, so my financial New Year’s Resolution is influenced by that,” said Rick Wallace, the founder of fishing gear review site TackleVillage. “The resolution I am implementing is to have at least three months’ living expenses for my family saved up and sitting in a cash account so it is there as a buffer in case of issues with health, family or employment.”
Wallace, like millions of others, resolved to build an emergency fund this year. Emergency funds are savings set aside solely for crises or sudden expenses to help ease the financial burden of disaster. A robust emergency fund can be the difference between a mountain or a molehill. Experts have varying opinions on how large emergency funds should be, but all agree that everyone should have a fund.
“Having emergency savings is crucial,” said Mason Miranda, a credit industry specialist. Miranda and his wife established a number of 2021 resolutions, including building savings. “Our goal is to have 6 months’ worth of expenses saved in our emergency fund, and enough in our home fund to fix a few major household malfunctions at one time.”
Miranda says he uses Mint to track his budget, and automatic transfers to savings to ensure money always goes toward the fund. Both tactics can be useful for anyone trying to start their own.
Like with budgeting, there’s no magic number or solution for emergency fund saving. The key is finding an approach that works for you, not bending over backward to make someone else’s strategy work. Whether you plan to save one, three, or six months of expenses, having money stashed in case of emergency is one of the best things you can do in the new year.
Miscellaneous Money-Saving Resolutions
Since the start of the pandemic, the average American has spent $67 per week ordering takeout. With many restaurants closed or restricted and grocery shopping occasionally difficult, 65 percent of people are spending more on delivery now than they did pre-pandemic. The food is delicious and supporting local eateries is excellent, but takeout isn’t always budget-friendly.
One resolution that can help keep you slim and your wallet fat is cutting down takeout orders. Alison Pearson, Head of HR at Hal Waldman and Associates, said her resolution is to grocery shop every Sunday, consistently, to limit ordering out.
“With shutdowns, sticking to a grocery store trip went out of the window. This made me spend more money on takeout, which inevitably made me eat less healthily,” Pearson said. “I would so much rather eat healthy at home and save money for trips and delicious new meals on those trips for whenever we can travel again.”
The new year can be a great time to hone your financial skills, too. Whether you want to sharpen something you already know or learn something entirely new, the first steps are taking initiative and setting goals. Sara Mandeed, for example, resolved to get more involved in investing, despite some of her past reservations.
“I hear about all the great ways that investing can save or make you money, but then I watch the stock market bleed red one day and I freak out and sell,” she said. “I plan on overcoming my fear of investing.”
Mandeed said she hopes that by changing her mindset and seeking the aid of an advisor, she’ll be successful in the short and long term.
“I have a feeling that this practical view of money allows me to take these market dips as an opportunity to be better prepared and know my financial future 10-20 years down the road,” she said.
The Bottom Line
Whatever your financial resolution, be sure to make a plan, set goals, and keep an eye on the future. Whether you’re budgeting, building an emergency fund, or looking to save elsewhere, those strategies will help you stay successful.
Happy Resolution Month!