By Jordi Lippe-McGraw
The new year is right around the corner, and that means it’s resolution time. While you might be planning to drop 10 pounds or finally land your dream job, you should consider making some financial resolutions, too.
In fact, according to a Fidelity survey, more than one-third of Americans made a money resolution last New Year’s. Unfortunately, even solid resolutions fall by the wayside come springtime.
“Most people fail to keep their resolutions because they don’t create an action plan to achieve their goals and fall back on old habits,” said Mike Sullivan, a personal finance consultant with Take Charge America, a nonprofit that counsels on credit and manages debt. “In the case of financial resolutions, the best plans are focused on forming new money habits.”
With that in mind, here are five financial resolutions to make in 2018 and how to keep them.
1. Contribute to your retirement
According to a new survey by Earnest, a whopping 69 percent of millennials are not saving for retirement. While it’s difficult to set aside more money in addition to costs such as student loan repayment, putting even a little bit aside for retirement now can help big time in the long run.
“The more you save early, the more you will have, and by a lot,” said Leland Faust, financial expert and author of “A Capitalist’s Lament: How Wall Street is Fleecing You and Ruining America.” For example, according to Faust, if you save $250 a month with a 6 percent return, you can end up with about $250,000 after 30 years. But if you save for 40 years, you’ll have almost double that amount.
John Piershale, an adviser at Piershale Financial Group, said the new year is a good time to enroll in a retirement plan at your job. “Establish a retirement account early, and consistently contribute money to it,” he said. “You can easily do this by having an automatic deduction monthly from your bank account that goes to your retirement account.”
2. Get your student loans under control
Want to make 2018 the year you get serious about paying off your student debt? There are a number of ways to do it.
Joe Heider, founder of Cirrus Wealth Management, suggested that student loans should be organized based off of interest rates. “Make it a priority to pay off the higher-cost debt first to limit the interest paid over time,” he said. This strategy is known as the “debt avalanche” and it one of the most popular tactics for saving money on your loans.
Another popular method is the “debt snowball.” You focus on paying off the smallest loans first. Experts tout this as a psychologically empowering method because there’s something satisfying about crossing a debt off your list entirely. This tactic can be particularly helpful when you’re trying to stay motivated with your New Year’s resolution.
Lastly, if you need to lower your monthly payment, consider an income-driven repayment program based on what you can afford. Or, if you need a lower interest rate, look into refinancing your loans. Check out this post on the pros and cons of refinancing, and try our Student Loan Refinancing Calculator to see how much you could save.
3. Automate your savings
Saving money is a time-tested way to shore up your financial security. Unfortunately, almost half of Americans admitted they wouldn’t be able to find $400 in an emergency, according to a Federal Reserve study.
Saving for a rainy day seems difficult if you have a lot of expenses on your plate already, but luckily, saving even a few dollars here and there can help in a big way. “Even if you only save $50 every two weeks, you’ll have $1,300 to show for it at the end of the year,” said Sullivan. “To make it easy, work with your employer to authorize a direct deposit to your savings account.“
Where do you start? Check out these six great browser extensions that make automatically saving money a cinch.
4. Create a budget (and stick to it)
Whether you want to save more money or pay down your student debt faster, coming up with a budget is the best place to start.
“For the new year, take a list of what will matter to you over the next one year, five years, and 10 years,” said Uri Pomerantz, CEO of Twine, a new collaborative saving and investing app. “From there, you can better understand what you can do now to make those goals happen.”
Once you know your goals, begin to make your budget by closely tracking all of your income and expenses. From there, you could try a variety of strategies such as automating your monthly bill payments or paying for everything in cash. Sharing those goals with others also helps psychologically with keeping them and providing a level of accountability.
To make this new budget stick, Sullivan recommended sitting down once a month and budgeting your income and expenses. “Do this at the beginning of every month, and it will quickly become a habit and will make a tremendous difference in your finances,” he said.
5. Make more money
While you are working hard to pay off your loans and take care of your expenses, sometimes your day-to-day job just doesn’t cover it all. Taking on a side hustle is a great way to earn some extra cash — even better, you can work many gigs around your schedule.
Althea Green holds down a full-time job, but drives for Uber on her off hours and can make $400 in one weekend alone. Armaye Ejigu, meanwhile, makes deliveries for DoorDash on his lunch break and after work to pull in an extra $500 to $900 a week. Or try one of these easy moneymaking ideas, such as dog walking or teaching English online.
Aim for financial success in 2018
These resolutions are just some examples of the many possible goals you can set to boost your financial health for the year ahead. Consider other ways to turn things around, whether it’s using a personal loan to pay off your high-interest credit card, or saving money on gas by carpooling to work.
Even if you can’t keep all of these financial resolutions in 2018, keeping just one or two could help make a big impact on both your long- and short-term money goals.