6 Financial Resolutions for the New Year

6 Financial Resolutions for the New Year

It's the perfect time to set budget-friendly resolutions to pave the way to a more financially fit future. Whether you're looking to save for a specific goal, pay down debt, or make smarter financial decisions, these resolutions can help you manage your money more effectively and provide ongoing financial wellness for the coming year.

1. Create (and stick to!) a budget - If you don't have a monthly budget, create one now. Track your spending and income over several months, and then list every ongoing expense along with all your monthly income streams. Assign a dollar amount to each expense category, including savings and retirement planning. You're doing great if your columns are equal or your income exceeds expenses. However, if your expenses outweigh your income, you'll need to trim your spending or look for ways to increase your income.
After you've created your budget, or if you already have one, stick to it each month. You can use one of the many budgeting apps, like YNAB, to make this easier. Review your expenses throughout the month or at a designated time once a week to track your progress and make any necessary adjustments.
2. Build an emergency fund - Did you know that 69% of American households have less than $1,000 in emergency savings?
An emergency fund is your financial safety net. An unexpected expense can easily send you into debt without money set aside for an emergency. Experts recommend having three to six months' worth of living expenses in your emergency fund. This will give you peace of mind and the financial security to get through surprise expenses.

Resolve to build an emergency fund this year by setting aside a small sum of money each month until you have a nest egg that can get you through virtually any emergency.

3. Trim your expenses - Take a long, hard look at your spending habits. Have your expenses started trickling upward in any area(s)? For most people, expenses will continue to rise over time and with changing life circumstances unless they consciously try to control it. Reviewing your spending is the first step in reigning those numbers in. Identify your weak areas and brainstorm for ways to start spending less. For example, you can start eating out less, cut down on some subscriptions you don't need, and make your household cleaning products. Remember: Small change today adds up to big bucks tomorrow.

4. Pay down debt - High-interest debt can be a significant burden for any budget. In addition to paying interest that goes nowhere, the money paid toward debt could be channeled into savings or investments that can grow significantly over time.

Make this the year you pay down debt, or at least make real headway toward getting rid of it for good. You can prioritize high-interest debts, like credit card balances or personal loans, or work on paying off your smallest debt first to keep your motivation going. Trim your spending, increase your income, and use the extra funds to maximize payments on your chosen debt until it's paid off. Then, move on to the next debt on your list until you're completely debt-free.

CRCU has a debt consolidation loan that can help you simplify all your payments and organize your finances. Click here to learn more.

5. Automate your savings - It's all fine and wonderful to resolve to put more money into savings each month, but how do you turn those good intentions into reality? The answer is simple: by automating your savings.
Set up automatic monthly transfers from your checking account to your savings or investment accounts so you never forget to feed your savings again.
6. Expand your financial education - Financial literacy is an invaluable asset. Invest in your financial education this year by reading books, taking online courses, listening to podcasts, or attending seminars on personal finance. Understanding concepts like investing, taxes, and retirement planning will empower you to make informed decisions that can help ensure a financially secure future.
CRCU offers financial education programs to help the community and our members of all ages better understand financial concepts. Click here to learn more.