10 Financial Resolutions for the New Year

Blog posted On December 15, 2021

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The third most popular New Year’s resolution is saving money. Though New Year’s Eve is still a few weeks away, we wanted to help you start the year off on the right foot. Here are ten tips to help you boost your personal finance next year.

  1. Refinance your mortgage and student loans

Mortgage rates won’t stay low forever. By refinancing your mortgage while rates are still relatively low, you could save thousands of dollars in interest over the life of your loan. Plus, you can lower your monthly payments, take cash out, and switch from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.

  1. Consolidate or pay down credit card debt

If you do decide to refinance, you could also use the opportunity to exchange some of your home’s equity for cash. With the extra cash, you can consolidate high interest debt like credit card debt. Typically, credit card interest rates are much higher than mortgage interest rates. So the quicker you pay off your credit card debt, more money you’ll save.

  1. Create a spending plan

If you find yourself going over your budget every month, consider creating a more detailed spending plan instead. Unlike a budget, a spending plan lets you choose what exactly you want to spend your money on instead of focusing on what you can’t spend your money on. “The concept of living on a spending plan instead of a budget can give you freedom and peace of mind,” said Loreen Gilbert, an experienced wealth manager and CEO at WealthWise Financial Services.

  1. Automate your savings

By automating your savings every month, you essentially are putting your savings first instead of seeing what’s left over each month. It also alleviates the stress of having to decide how much you should put into savings every month. Many employers allow employees to put part of their paychecks into savings account like 401(k)s. You could also just set up an automatic payment from your bank account.

  1. Set up an emergency fund

More than 50% of Americans have less than three months of expenses in their emergency fund. Most experts recommend having around six months. If you’re having trouble building your emergency fund, you can try opening a separate account specifically for that purpose

  1. Boost your retirement savings

Saving for retirement is one of the most important aspects of financial planning. One easy way is through your employer’s 401(k), if they have this option. Make sure you’re contributing enough to get their full match.

  1. Increase investments

“While it’s great to max out your tax-advantaged retirement accounts — $6,000 in an IRA and up to $20,500 in a 401(k) — you’re going to have even more opportunities if you save in a taxable account as well,” said James Royal, Bankrate investment and wealth management reporter. By investing outside of your retirement accounts, you benefit from no limit on what you can save. Plus, there’s immediate access to the cash you’re saving without penalties or restrictions (unlike IRAs or 401(k)s). Another tactic many investment management experts suggest is to diversify your portfolio. This means investing in different types of assets stocks, bonds, and real estate. To get a head start on your savings resolution for the new year, head to our loan product page to start shopping for your perfect mortgage fit.

  1. Improve your credit score

A good credit score can increase your financial opportunities greatly. The higher your credit score, the easier it will be to qualify for a mortgage. It can also help you qualify for better rates. Some quick ways that you can boost your credit score include:

  • Pay your bills on time and in full
  • Lower your credit utilization ratio
  • Try not to open new accounts

For more tips on how to boost your credit score, check out our blog.

  1. Cook more meals at home

Though cooking at home is a bit more time-consuming than ordering food online, it can help you save a great deal of money each month.

  1. Update your beneficiaries

Every so often, it’s a good idea to update your beneficiaries. “If you haven’t looked at it in a while if there has been a change in family dynamics such as a marriage or divorce, review the beneficiary designation on your life insurance and retirement accounts to make sure it reflects your current intentions,” says Bankrate Chief Financial Analyst, Greg McBride, CFA.

One of the largest expenses that Americans pay is rent. Rent prices have been soaring recently, putting a bigger dent in tenants’ wallets. By investing in a home of your own, you can save money on rent, start earning equity, and earn money later if you decide to sell. If you would like to explore your home buying options, let us know.

Sources: Bankrate, Statista