A new year brings along the chance for us to start fresh. As we discuss resolutions and plan for the year ahead, we often think about creating personal goals. But financial goals are important too. Here are a few, simple tips that can get your new year financially set off on the right foot.
Think about the future
The beginning of the new year is a great time to set up new financial savings goals. If you’re looking to bump up your savings account, figure out how much you can reasonably set aside each month while still living comfortably. Try to be consistent and set up funds to be automatically transferred each month. It’s easier to save when you don’t have to put extra thought into the process.
When you decide on your savings goals, consider both your long-term and short-term plans. Money can be set aside for taking a much-needed vacation as well as for college bills and retirement. Separate savings accounts can make it easier to budget accordingly.
If you have savings invested in the stock market, whether through individual stocks, mutual funds or investment accounts that hold your retirement savings, review how well these accounts did in the prior year. When necessary, rebalance the accounts so you take full advantage of the ups and downs of the stock market. Talk to a professional as needed.
An emergency fund is a key component of any financial plan, and three months of expenses is the minimum you should have set aside. Ideally, six months of savings is best, so you can avoid unnecessary worry if you decide you want to change jobs or have unexpected bills to pay.
Look back to plan ahead
Expenses can vary from month to month. As you review your budget, look back at prior years to find one-off items that pushed you over budget, like expenses for car repairs, medical bills, vacations and even kids’ activities. Try to add a placeholder for these amounts in the current year.
While you may plan to spend less in the coming year, be realistic when you map out your costs. Review which items you can truly live without, and what variable costs you know you’ll end up splurging on when you’re having an off day.
As you clean up your accounts for the year, go through credit card bills and online billing services to find recurring charges for newspaper subscriptions, Apple apps, streaming services and other items you may have forgotten you signed up for. Cancel any unused subscriptions and keep a record if you sign up for something new this year.
Your credit score is an important component of financial planning because it impacts future loans and even potential employment. Review your score on all three credit unions and, when necessary, make plans for improvement by paying down debt and reorganizing loans.
Take advantage of financial saving opportunities
Each year, the IRS increases the amount individuals can set aside in their retirement accounts. By taking advantage of the maximum contribution available, you’ll pay less in taxes in the current year, have more funds set aside for retirement and can take full advantage of any available employer match programs.
If you use a flexible spending account and calculate the amount you’ll contribute for medical bills this year, be sure to include costs for co-pays, one-off items such as new glasses and off the shelf toiletries like band-aids and menstrual products. As the new year begins, don't forget to use your newly replenished card when you attend doctor appointments or pick up prescriptions.
Live simply
There are many ways to save money and still have fun with friends and family. Get a new cookbook and try out the recipes. Start meal planning at the beginning of the week, food shop for those items and stick to a schedule so you are less tempted to eat out.
Schedule time with friends for a game night or other lower cost activities. Local libraries often coordinate free or reasonably priced shows, book clubs or lessons you can enjoy with friends and neighbors. Some even offer discounts to museums and other activities.
However, you decide to save in the new year, make a plan to revisit, and re-evaluate, your finances as often as necessary so you can reach your goals.
For more on personal finance topics
If you have more questions about other personal finance topics that matter to you, visit the Learning Center on TD Bank’s website. You can find out more information about TD Bank's services at td.com.
We hope you found this helpful. This article is based on information available in January 2024 and is subject to change. It is provided as a convenience and for general information purposes only. Our content is not intended to provide legal, tax, investment, or financial advice or to indicate that a particular TD Bank or third-party product or service is available or right for you.
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