8 Financial Health Resolutions for the New Year
Setting your sights on measurable goals will allow you to enjoy the rewards that come with taking control of your money.
After a year of economic uncertainty and financial setbacks, many Americans are looking to get their financial health in order in 2021. Nearly two-thirds are considering a financial resolution for the new year, according to Fidelity Investments’ 2021 Financial Resolutions Study.
Saving more, paying down debt, and spending less money are among 2021’s top goals, and 1 in 6 have set their sights on recovering from financial losses due to the COVID-19 pandemic, the study found.
Whether your personal finances need a major overhaul or a minor tweak, consider implementing the following financial health resolutions to get fiscally fit this year.
Financial health resolution #1: Set measurable goals
Setting clear and specific goals was a major reason people were able to stick with their past financial resolutions, according to the Fidelity survey. The momentum gained from making progress on these resolutions significantly helped people persist toward their goals.
It’s not enough to say that you want to pay off your $5,000 credit card bill next year. Instead, set up a payment plan that allows you to track your success. This not only helps you know how much you must devote to your balance each month to reach your payoff deadline, but also keeps you motivated because you can view your progress.
Financial health resolution #2: Automate what you can
After you set specific goals, automate as much as you can to avoid temptation and make progress toward your resolutions. Maybe that means having a portion of your paycheck automatically deposited into your savings account or increasing your retirement withholdings.
You can also automate bill payments — from car loans to phone bills to subscription services — to alleviate worry over whether you’ve paid them and avoid possible late charges.
Financial health resolution #3: Track your spending
Roughly two-thirds of Americans have changed their spending habits as a result of the pandemic. That means it’s time to revisit your personal budget and make sure it matches your current situation.
Perhaps you can divert money saved on gas and transportation to home improvement needs or paying down debt. A variety of personal finance software programs exist to help you create and update a personalized budget easily and efficiently. Try a free online tool like the Zions Bank home budget calculator to get started.
Financial health resolution #4: Pay down debt
Despite the financial disruption of the past year, consumers cut credit card debt by $120 billion in the first three quarters of 2020, a 13% drop from the end of 2019, according the New York Federal Reserve.
Keep chipping away at monthly credit card debt in 2021 by adding a modest amount to your monthly minimum, which can add up to thousands of dollars in interest savings. Paying down excess debt can also help boost your credit score, saving you money in the form of lower interest rates on future loans. While simple math suggests you should prioritize paying off higher-interest loans, many people have more success paying off the smallest debt first, which gives them the momentum to tackle the next smallest debt.
Financial health resolution #5: Review your insurance coverage
Like the face masks used as a barrier against the COVID-19 virus, insurance can be a barrier against financial hazards. Review your insurance policies to make sure you have adequate coverage. Homeowners and renters insurance, for example, do not typically cover flooding or earthquakes. Obtain property, health and life insurance if you do not have them.
Financial health resolution #6: Build your emergency savings
More than one in six Americans — up to 46 million people — have relied on their emergency savings during the pandemic, according to a CNBC/SurveyMonkey poll. Having spare cash at your disposal not only makes an emergency situation far less stressful, it also helps you steer clear of costly sources of quick cash like high-APR credit cards, short-term loans and payday loans. Most financial professionals recommend setting aside three to six months’ worth of living expenses for emergencies. If this seems overwhelming, start with a more attainable goal of $1,000 of emergency money.
Financial health resolution #7: Maximize your savings
One unusual feature of the U.S. economy during the COVID-19 pandemic has been a massive increase in savings. According to the Bureau of Economic Analysis, saving nearly tripled over the first two quarters of 2020 — the biggest increase in modern history.
A traditional savings account is a great place to start, but you can generate even more wealth by using the right type of tools and vehicles. For instance, opening a high-yield savings account or a certificate of deposit can help you enjoy higher interest rates. Contributing the maximum to your 401(k) or IRA also allows you to benefit from compound interest.
Financial health resolution #8: Plan for the future
With Americans living longer and saving less, many people nowadays are in danger of outliving their retirement savings. See that you’re socking away enough each month to meet the growing cost of retirement. If you’re not already contributing the maximum amount to company 401(k) plans and other retirement vehicles, adjust your withholding. And if it’s financially feasible, prepare for your children’s future by setting aside funds for college with a 529 plan that offers tax advantages.
Johnny Cash defined success as “having to worry about every … thing in the world, except money.” While some financial stresses are unavoidable, setting your sights on measurable goals will allow you to enjoy the rewards that come with taking control of your money.
A Zions Bank relationship manager can help you get your financial house in order by helping you open a savings account or CD, and you can help automate your savings plan by enrolling in Zions Bank online banking*. Visit a local Zions Bank branch to get started.
*Mobile banking is included at no cost from Zions Bank. Requires download of Zions Bank App from the Apple® App Store, Google Play®, or Samsung Galaxy® App Store. Message and data rates from your wireless provider may apply. Requires enrollment in Online banking. Subject to the terms and conditions of the Internet Banking Services Agreement. Some Online and Mobile features, including Bill Pay, may not extend to minors.
Kallee Feuz is a public relations officer for Zions Bank.