End of year is a time to reflect back and look forward. As we do so, finances are often part of our New Year’s goals. Before you fire off a multi-colored-confetti cannon and usher in the New Year, ask yourself these five questions.
1. Did I make financial progress this year?
What were your financial goals for the past year? Did you plan to build a three-month emergency fund, pay off a credit card balance or save money for a large purchase? Hitting your financial targets isn’t the only measure of success. If you made any progress toward achieving your goals, celebrate! Acknowledging wins builds confidence and helps you stay on track.
Use the progress made this year to decide if changes are needed. Maybe starting a side hustle or trimming expenses can get you to the financial finish line. Before finalizing a new money goal, review your budget for ways to lower expenses or look for a way to earn extra money to ensure it’s achievable in the New Year.
2. What did I learn?
If you’re finishing out the year having learned some new financial skills, kudos to you! Maybe this was the year you dug in to learn more about budgeting or saving for retirement. Perhaps you made a plan to pay off debt. And if you’re wishing you had learned more this year, never fear! We have resources for you.
3. Where were my finances most at risk this year?
Financial changes can come in the form of things that affect us all, like a recession. Or at the individual level, like marriage, divorce, having children. When you reflect on this year, what financial changes did our society face? What changes affected you personally? Did anything happen that put your finances at risk?
Even if you had a good year financially, having a financial safety net to pay for bills or other expenses in case of emergency can offer peace of mind. Establishing a three- to six-month emergency fund savings account is a worthy New Year goal. It may take several years to build your fund, which is why it’s good to get started now.
4. Do I have enough insurance coverage?
Home and auto insurance can help protect your finances all year long. By minimizing out-of-pocket expenses for accidents, repairs, or other eligible claims, insurance policies can shield you from financial hardship. Now is the time to review policies to ensure you have enough coverage based on your assets, income, and household size.
5. How much do I have in retirement savings?
If you have an existing retirement account, take time to review how much you have saved and what that might mean when you reach retirement age. Review how much you’re contributing from each paycheck next year. If your employer matches your savings, commit to save up to at least the matched amount if at all possible.
And if you haven’t started yet, you’re not alone. According to PwC’s Retirement in America report, 1 in 4 US adults have no retirement savings. Get started with whatever you can. Even if the budget doesn’t allow you to save as much as you’d like, commit to regularly saving a small amount. A consistent savings habit is likely to produce larger returns than a one-time deposit. And the longer you delay saving, the more money you could miss out on in compounding interest.
Whether the past year was what you hoped for financially or far from it, the New Year awaits. The time will pass with or without financial plans and goals. Use this time to set a goal for next year, however big or small. We’ll be here cheering for you. And remember, we’re a phone call away if you have questions. We wish you a joyful and prosperous New Year!