The new year is just around the corner, and with it comes resolutions from across the country. In addition to personal aspirations, New Year’s resolutions are a great way to kick off your financial goals too. It’s a fantastic time to review your spending habits and identify places for improvement. The truth is, everyone can get better in one way or another.
The key to turning these goals into a reality is to set achievable objectives with actionable steps you can take to make them happen.
Here are three financial resolutions you can start doing right now:
Boost Retirement Contributions
Increasing the amount you set aside per paycheck towards retirement now can make a very big impact on your future. As your career progresses, you naturally start to earn more money. If you’ve seen a pay raise in 2019, it may be time to take a look at the money you need vs. the money you want. If you can maintain a comfortable living standard while taking the time to invest more in your future, now is certainly the time to act. At the very least, take a look to see if your employer matches any 401(k) contributions and review if adding more money to your side can maximize the amount they match. Skipping an employer match is akin to leaving part of your earnings behind. It is free money, as long as you can commit to not seeing that part of your paycheck until retirement.
Increase Debt Payments
If you’re like many Americans, you’re carrying some amount of debt. It’s a fact of life in our society. The important part is not to let it get out of hand. It has a way of adding up very quickly, and if you don’t keep an eye on it, it can snowball into a much greater problem. For 2020, we’re not going to tell you to wipe out everything that you owe. Instead, we recommend chipping away at it with additional payments per month. That extra amount tacked onto your typical payment will do wonders for you down the line. Try using an avalanche approach, which focuses on paying down the highest lines of debt first; or inversely, you can use the snowball method, which emphasizes starting with paying down your smallest debts, and once paid off, taking the amount you would have paid and allocate to the next lowest payment level.
Rebalance Your Investment Goals
Each year brings with it new factors in the market. What may have been considered a smart investment in 2019 may not be as profitable in 2020. This new year, take the time to review your portfolio and compare it to your investment goals. Move some money around to areas that make sense. If you see more volatility lately, it may be time to focus on some of your long-term goals instead. On the other hand, if you see some opportunities for growth in the short term, it may be a good time to leverage them with more investment. Schedule a meeting with your financial advisor to review things together, and take a path that makes the most sense for you.
If you would like to learn more about how we can help you and your business improve its accounting practices, reach out to our team. For more information on other accounting topics, check out our blog.