9 New Year’s financial resolutions for 2019
Each New Year signifies new beginnings—a chance to start over and set yourself up for 365 days of success. We often use New Year’s as an opportunity to introduce better behaviors within our daily lives, setting resolutions to go to the gym more, build better interpersonal relationships, eat healthier, see our family more, and the like.
But in 2019, there’s a new trend emerging among the most common New Year’s resolutions. Almost 9 in 10 Americans are planning on making some sort of financial resolution in the upcoming New Year . In fact, 36 percent of Americans are resolving to save more money in 2019, beating out recurring resolutions like spending more time with family and friends, finding love, traveling more, trying a new skill or hobby, quitting an unhealthy habit, and volunteering more .
And whether you’re looking for a complete financial makeover or you simply need to make a few small adjustments to your savings/spending plan, you likely could benefit from setting a financial New Year’s resolution or two. So without further ado, here are nine great financial resolutions to focus on in 2019.
New Year’s resolutions to help you reach your financial goals
1. Develop a long-term savings plan
If you’re trying to meet long-term savings goals, like reaching retirement or developing an adequate emergency fund, you’ll want a long-term savings plan in place to help you get there. You don’t start a road trip without first figuring out how you’re going to get to your final destination, right? The same can be said for long-term financial goals. And while you don’t need an actual physical map in front of you to find your way on a road trip, it would be worth your while to create an actual physical copy of your long-term savings plan. Studies show that having a well-defined written strategy can make a substantial difference in your financial outcomes—with 54 percent of workers who have a written plan for reaching retirement reporting that they feel confident they’ll retire to a comfortable lifestyle, compared to just 31 percent of workers without a written plan and 11 percent with no plan at all .
2. Set (and stick to) a budget
Having a budget is almost a necessity if you’re wondering where each dollar of your paycheck is going, yet only two in five adults in the U.S. say they have a budget they follow . This is a missed opportunity if you’re looking to ramp up your retirement account, build an emergency fund, pay off debt, or simply be financially responsible. Separate your monthly expenses into two categories: fixed and variable; your fixed expenses will include things like food and housing costs, car payments, and bills, while your variables include entertainment expenses and other non-essentials. Then determine your after-tax income (accounting for automatic deductions like health insurance premiums and 401(k) contributions) and allocate the appropriate dollar amount for each fixed expense within your budget. Take the remainder and split it between your variable expenses and a savings account—reducing the amount spent on variables if at all possible to help increase savings rates.
3. Save X percent of your gross income
This resolution should be specific to you and your personal goals, which is why we didn’t throw a one-size-fits-all, generic number in there. So, how much should you aim to save? Well, that depends entirely on your goals. Are you looking to save for retirement? For a vacation? For a house? All of the above?
Your savings goals will look immensely different from another person’s depending on your own individual goals, but a good rule of thumb to follow is that you should try to allocate roughly 20 percent of your gross income towards savings. More is fine, less may not be. Saving less than 20 percent is probably not in your best interest, but above all, your savings goals need to be in line with your current financial situation. And if you can’t afford to put away 20 percent of your paycheck, remember that any amount of savings is better than no savings at all—and no amount is too small to start.
4. Increase 401(k) contributions
Whether you’re quickly approaching the years of retirement bliss or you’re just entering the workforce for the first time, you may think you still have plenty of time to save for the golden years of your life. And while you aren’t wrong (it’s never too late to start!), that procrastinator mindset may be the cause of some scary statistics. Retiring without having enough money saved is the top financial concern among today’s workforce, so while it may seem like you have plenty of time to save, it’s extremely important to begin preparing for retirement as soon as you can . Young savers benefit from the effects of compounding interest when they save early on in their careers, and we don’t even need to preach the benefit and vital importance of preparing for retirement when it’s only a few years down the road. Make a conscious decision to increase your 401(k) contributions by a few percentage points each year, putting yourself further along the path to retirement readiness so you are fully prepared when the time comes.
5. Pay down debt
In 2018, Americans’ consumer debt hit an all-time high of $13 trillion—thanks in part to rising costs of secondary education and ongoing growth in home, auto, and credit loans . So it should come as no surprise that we’re including paying down debt in our top nine New Year’s financial resolutions for 2019. Focus on decreasing the amount of debt you owe and pay special attention to the loans/debt with the highest interest rates. Paying those down first will save you money long-term while still helping put you in a better financial position right now. In addition to paying off the debt you already owe, make it a goal to not add any more debt to your current financial repertoire.
6. Cut back on unnecessary spending
This resolution is relatively self-explanatory, but thanks to the rising popularity of subscription services—including everything from Amazon Prime to Netflix to Birchbox to Spotify—you may not even realize a decent chunk of money is being automatically withdrawn from your account every month. Take a look at what you’re spending each month on subscription services and cut out the ones you aren’t using enough to make them worth paying for. With that being said, sticking to a budget often seems more difficult when you’re depriving yourself of the things you want, so it’s not a bad idea to keep one or two of your favorite subscription services going. But if you can, cut back on some of the more splurge-worthy subscriptions and other unnecessary expenses, like eating out frequently or paying for cable.
7. Add one month worth of expenses to your emergency fund
We told you what Americans’ top financial worry is earlier on—wondering what number two is? Here’s a hint: more than half of Americans don’t have it . And it’s something very important to have.
The future is unpredictable, and workers need to have a steady safety net built up in case of an emergency—yet 54 percent of Americans still don’t have an emergency fund or rainy day savings set aside, leaving them vulnerable when life twists and turns, as it often does . Experts suggest setting aside at least six months’ worth of living expenses in case you find yourself unemployed or unable to work for any reason, a disaster strikes, or the market takes an unexpected downturn.
If, like over half of all Americans, you don’t have an emergency savings account, now is the perfect time to start one. Having a steady stream of funds available will reduce stress in times of hardship, so in 2019, make it a goal to add at least one month’s worth of expenses to a rainy day fund. But don’t put too much stress on yourself to reach six months of savings right off the bat—slow and steady wins the race when developing new financial habits.
8. Advance your personal financial literacy
Financial literacy is the knowledge that’s needed to make financially-responsible decisions in everyday life, and it impacts issues Americans face on the daily—like buying a home, following a budget, saving for retirement, and paying for college. We don’t need to tell you that it’s important to know how to do these things, but here’s the kicker: Americans that have higher levels of financial literacy are proven to engage in better behaviors with their money . They make better investment decisions, manage credit card debt more effectively, and are more likely to save for retirement; all things that are worthy of their own New Year’s financial resolution, no? Join them in making smart money moves by advancing your personal financial literacy rate.
9. Join a financial wellness program
Last but certainly not least: amp up your financial literacy efforts by joining a financial wellness program or challenge. If your employer offers some type of financial wellness benefit, we highly recommend joining in; the reward is worth the effort. Statistics show that a staggering 91 percent of employees who participate in a workplace financial wellness program say the resources they were provided with were effective for them . If your employer doesn’t currently provide any type of financial wellness benefit, you may not be out of luck quite yet. Employers are beginning to understand the importance of providing such a benefit to employees, with 46 percent of employers reporting they either already have or are planning to expand their current financial wellness program offering .
Tips for following through with New Year’s financial resolutions
We all know the struggle of sticking to a New Year’s resolution, but if the resolution is important to you—as overall financial wellness should be—you can utilize simple tactics to help keep you on track. Start by making sure your resolutions are realistic. Can you save, say, 15 percent of your gross income for retirement if you’ve never set aside a penny for the future before? While it’s certainly possible, it’s probably not realistic. Make sure you don’t set your sights too high, or you’ll feel burned out quickly and may give up the goal entirely.
Following the same train of thought, make sure you keep your resolutions top of mind throughout the year. Have you ever noticed how your gym gets significantly busier at the start of January only to return to normal a few weeks later? It’s common to start easing back on your resolutions after a few weeks or a couple month, but remind yourself throughout the year why you set those goals in the first place. If you are someone who needs frequent reminders, consider making a vision board to display in your house or finding a friend with similar goals to act as an accountability partner. Or get the whole family involved in a savings plan; teach the kids about healthy financial habits by encouraging them to save one dollar each day for the whole year and allowing them to spend a portion of their savings at the end of the year on something they’ve been wanting. Or pool the money the whole family saves and go on a weekend getaway—a family of four each saving $1 per day equates to almost $1,500 by the end of the year! But if you aren’t comfortable discussing personal financial goals with friends or family, utilizing technology to hold you accountable is also a great option. There are a variety of mobile apps out there today that are specifically designed to help you save money and stay on track with your financial goals.
Finally, remember that you don’t have to do it all at once. Break large goals, like reaching retirement readiness, into smaller, easier-to-reach goals and celebrate your successes along the way. Rome wasn’t built in a day, and total financial wellness won’t be either. Take it one step at a time and stick to your plan, and you’ll see undoubtedly some real progress in 365 days.