As we prepare to start the New Year, now is a great time to join in on the tradition of New Year’s “resolutions.”
2020 was an unprecedented year with Covid-19 that really opened our eyes to the important things in life. Hopefully, making lemonade out of lemons, this has provided us with some clarity on our resolutions for 2021.
Sometimes coming up with effective New Year’s resolutions is tough. It takes time to come up with goals that are specific, realistic, and motivating. Our team of financial advisers has put together some goals that you can adopt or use as inspiration for your own financial resolutions for the new year.
These 5 goals provide a framework to help you feel confident about your finances and keep you on the path to financial success.
1) Learn Financial Terms
Whenever you hear someone speak personal finance, do you feel like you’re learning a foreign language? If yes, we highly encourage you to read up on some books that can help teach you the lingo used when talking about money, investing, and accounting. Surrounding yourself and becoming familiar with financial jargon will help you understand the concept of money and personal finance. Equipped with a foundational understanding, you can take advantage of what is out there instead of the world taking advantage of you.
2) Save Up an Emergency Fund
An emergency fund is there for you to help cover your expenses if something unexpected were to happen. Some examples of unexpected expenses include home repairs, the passing of the family breadwinner, and unexpected medical bills. We encourage individuals to aim for around 3-6 months of living expenses as a liquid emergency fund. A good thing to keep in mind is that if your job is more volatile and income is not steady, you should probably shoot for a larger emergency fund.
3) Start Saving for Retirement
Did you know, according to the Federal Reserve’s 2018 Report on the Economic Well-Being of US Household, 25% of US adults have no retirement savings*? That is a surprising amount. If you have a full-time job with a retirement plan, we suggest that you take advantage of your employer sponsored retirement plan. The most common types of plans through work include 401(k)’s, 403(b)’s, and 457(b)’s. If your budget allows, you should contribute the minimum amount to qualify for your employer’s match. That is free money from your company to you! If you work part time or your company does not have a retirement plan, you can start your own retirement account. The most common individual retirement accounts are Traditional IRA’s and Roth IRA’s.
4) Better Your Career
If you love your job and can see yourself long term in that field, you are probably already motivated to improve yourself and your craft. We suggest, if possible, to continue your education through degrees, certification, and licenses. If you are an employee, this constant improvement will eventually result in a raise or promotion. If you are self-employed, constant improvement will help your revenue continue to grow.
If you are not happy in your job, it may be time to look for a more fulfilling and better job. One option if you are unhappy is to apply to new jobs. You can use one of the many job finding websites, but if you utilize your personal connections, you are more likely to have success. Another option is to turn your favorite hobby into your own business. Whether it’s turning your own baseball card collection into a card selling business, or turning your love of driving into a delivery business, you might be surprised at how effective you can be in monetizing your hobbies.
5) Set Up a Financial Plan/Check in With Existing Plan
If you are young and haven’t started making a financial plan, now is a great time to start. If you are older and haven’t thought about a financial plan, it’s not too late to start! A long-term financial plan will encompass all aspects of finance from how you are earning money to how you are going to leave a legacy. A good plan will help you make better financial decisions for the rest of your life.
If you already have a financial plan set up, it’s a great time to review and see if you are on pace to achieve your goals or not. You might need to make some adjustments since the goals you set a while ago might not be applicable now. There could also be things that you didn’t consider in the past that might be important for the future.
We hope these goals inspire you to better yourself every day. Feel free to let us know what’s important to you and we can assist in setting goals that are both motivating and achievable.
In good financial health,
Tori, Alex, and Brandon
*https://www.cnbc.com/2019/05/24/25-percent-of-us-adults-have-no-retirement-savings-fed-finds.html