Working on your financial health should be a year-round exercise. To make a real difference to your balance sheet, you need to consistently implement strategies to lower your expenditure and increase your savings.
However, New Year’s can be a good time to resolve to do better. It gives us the chance to set fresh goals and set out plans to achieve them.
The problem with New Year’s resolutions is that, while almost everyone sets them, very few people see them through. There is a reason for this. Most New Year’s resolutions are both vague and overly ambitious.
You might say something like, ‘In 2022, I will clear up all my debt.’ That sounds great but is ultimately meaningless, as it gets you no closer to your target.
Setting sustainable New Year’s resolutions is possible, though. You simply need to be specific and realistic. Here are sustainable New Year’s resolutions that will help you financially in 2022.
1. Open A Life Insurance Policy (or review it)
One of the areas of life which people tend to avoid is the admin surrounding their eventual death. It is a tough topic to broach, which is why millions of Americans are unprepared. The problem is that putting it off for ‘later’ may mean leaving your family in huge financial trouble at the worst possible time.
This year, resolve to open up a life insurance policy if you don’t already have one. If you do have one, review it to ensure that it is still in line with your life as it is now. A life insurance policy that you opened at the beginning of your career when it was just you and your spouse is not going to be enough if you now have children.
In addition to taking care of your life insurance, resolve to take care of the other admin surrounding death, including writing a will.
2. Assess Your Retirement Savings
No matter what stage of life you are currently in, retirement needs to be something you have planned for. All things being equal, you will potentially live for decades during which you are not earning any income. You need to ensure that you will be able to support your lifestyle.
If you work for a company, you will already have a 401(k). A 401(k) is an individual retirement account (IRA) that receives funds from your gross income every month. When you retire, you withdraw funds built up over your whole career.
This year, resolve to spend time assessing your retirement savings. Your 401(k) is unlikely to be enough on its own. Look to your budget for ways you can save money towards retirement.
Also, consider whether your current IRA is the best option for you. If you are likely to be taxed in a higher bracket by the time you retire, you might want to contribute to a Roth IRA. This is an account you pay into from your net income, that is not taxed when you eventually withdraw the funds.
3. Alter Your Budget To Improve Quality Of Life
We all know the virtues of budgeting. It ensures that we make ends meet every month while having money to save. But there is a problem with the way many of us budget. We make choices that lower our quality of life rather than improve it. This is the opposite of good budgeting.
In 2022, go through your budget and see how you can use it to improve the quality of life you live. This will require you to think about the things you want most from your life. You might want to travel more or host more dinner parties. You might want to do a meditation course and start going to regular retreats. Whatever your preferences, your budget should work to make them happen.
Instead of looking at what you’re spending and seeing how you can lower your expenses in those areas, consider what you’re spending on in place of what truly matters to you. Maybe you spend money on home decor that doesn’t actually make you feel more at home. Maybe you spend on cinema tickets but don’t mind watching movies at home.
These are the types of things that, by cutting from your budget, you can improve your quality of life without sacrificing anything that really matters.
This year, make New Year’s resolutions that are sustainable. By making them specific and realistic, you can turn this into a pivotal moment.