pink piggy bank with new year's glasses representing new year's financial resolutions

10 Common New Year’s Financial Resolutions

The new year is a great time to think about financial affairs. While financial New Year’s resolutions vary, 10 of the most common ones include:

1. Save More Money. Many people resolve to save a percentage of their income. The same resolve applies to business savings.

2. Pay Off Debt. This often involves paying down credit card debt, student loans, or other outstanding loans. Do you know your debt-to-income ratio — how much are your debt payments compared to your income during the same time period?

3. Create a Budget. Establishing a budget helps individuals and businesses track spending, identify areas for improvement, and allocate resources wisely. A budget creates a measuring stick against which you can compare your financial decisions throughout the year.

4. Reduce Unnecessary Expenses. Cutting back on non-essential expenses can free up money for more important goals. Expenses are only half of the equation, however. And often, you need to spend money to make money, which is why the next item can be even more impactful.

5. Increase Income. Whether it’s negotiating a raise, taking on a side gig, or pursuing a new opportunity, many people aim to boost their income in the new year. Can you take on a new client? Deliver services through a new channel? Create a new market?

6. Build an Emergency Fund. People typically aim to set aside three to six months’ worth of living expenses. For businesses, a good benchmark is being able to cover at least the next two payrolls to keep your team working and earning.

7. Improve Credit Score. People or businesses with lower credit scores can often improve their creditworthiness by paying bills on time, reducing credit card and loan balances, and disputing errors on their credit reports. Poor credit can increase your costs of financing, insurance, and rent.

8. Review and Update Insurance. Reevaluating insurance coverages can help ensure adequate protection without overpaying. Does your business insurance cover the loss of key personnel, data breaches, or closures due to issues out of your control, such as the COVID-19 shutdowns?

9. Track Financial Progress. Regularly monitoring and evaluating progress can help individuals stay on track with their goals.

10. Contribute to Retirement Accounts. Increasing contributions to retirement accounts can help secure your financial future. Whenever possible, maximize contributions that are matched by an employer.

If financial matters aren’t your specialty, you may want to consult with a financial advisor or accountant. Getting expert and unbiased advice can help you weigh options to choose what’s best for you, your family, and your business.

Remember that the key to successful financial New Year’s resolutions is setting specific, achievable goals and creating a plan to work toward them. Follow up throughout the year by tracking progress and making adjustments to support your short and long-term goals.

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