Jan 5, 2023
Top 9 financial New Year’s resolutions for parents in 2023
- Your goals should be specific, measurable, attainable, relevant, and time-bound.
- Common financial New Year's resolutions include paying off debt, saving for retirement, and building an emergency fund.
- Breaking goals down into smaller checkpoints can help improve your odds of success.
The new year is a great time to reset, recharge, and refocus on our goals. The most common New Year’s resolution in 2022 revolved around health and happiness — but as it turns out, financial New Year’s resolutions are on the rise. A recent survey found that 66% of Americans plan to make a resolution related to improving their finances. We love that.
If bettering your family’s financial situation is top of mind for this new year, read on. You’ll find everything you need to know to set realistic financial goals for the next 12 months.
How to set financial New Year’s resolutions
Setting goals for the new year can feel intimidating, especially when it comes to your financial life. Where do you even begin?
We recommend that you start with a close look at your financial health and a check-in with your long-term goals. Are you on track? Do you have clear long-term goals? Is a specific area of your finances holding you back?
Perhaps you have credit card debt that makes it difficult to get ahead financially. Or perhaps you’ve made progress on your debt, but you know you’re behind on your retirement savings. Maybe retirement is on track, but you don’t have an emergency fund yet.
Whatever your situation might be, it’s wise to pick an area of your finances to focus on. From there, come up with an attainable goal to aim for in the new year. Many universities and institutions use the S.M.A.R.T. goals framework when setting goals. A S.M.A.R.T. goal is:
Specific: Precise rather than general
Measurable: Attached to something you can count, like a dollar amount
Attainable: Realistically achievable given your financial situation
Relevant: Pertinent to your values and objectives
Time-bound: Has a clear end date
Here’s an example of a S.M.A.R.T. goal for the new year:
“I will pay off my credit card debt by the end of this year. To achieve this, I will pay $200 per month towards my debt. I will make these payments the day after I get my paycheck on the first of every month.”
Avoid S.M.A.R.T. goals, like “I will save more money.” These tend to be less successful.
9 financial New Year’s resolutions
Everyone’s situation is different, but here are some top financial resolutions for the new year.
1. Create a financial plan.
In many cases, crafting a broad plan for your financial future can be a solid financial goal for the new year. You can make a plan on your own or work with a financial advisor.
Financial plans should focus on both short-term goals (save $100 per month) and long-term goals (save $2,000 a year for retirement). A clear and well-developed plan makes it easier to progress toward your goals.
2. Build a budget — and stick to it.
Budgeting is a way to pre-plan your spending so that your finances stay on track. It’s useful if you want to spend less, save more, and be more aware of where your money goes each month.
You can use a budgeting app on your phone for simplified money management. And, if you want to teach your kids and teens about budgeting, use the Greenlight app. With the app, your kids can learn to budget their allowance or income. It’s a great way to set them up for future financial success.
3. Save for emergencies.
Being prepared for unexpected expenses can help provide peace of mind and prevent you from going into debt during an emergency. The best way to prepare is to start an emergency fund, ideally with a separate savings account that you only access in emergency situations.
Common advice is generally to have at least 3 to 6 months’ worth of expenses saved. If your household spends $3,500 per month, that’s $10,500 to $21,000 in an emergency fund. With that said, any amount of emergency savings can help your family during rocky times.
4. Pay down debt.
Data shows that around 80% of Americans have consumer debt. Debt can really hold you back from your financial goals, especially if you have high-interest debt on a credit card or personal loan.
A good resolution might be to pay off your debt completely. If that’s not attainable, aim for a specific dollar amount and timeframe — $3,000 by the end of the year, for example.
Need a boost? Consider refinancing your debt into a lower-interest line of credit or consolidation loan. If you have good credit, it could help you save money on interest. Be sure to shop around with different lenders to find the best rates.
5. Teach your kids about money.
Managing money is better together. In 2023, start teaching your kids and teens about money. It’s never too early to start. Financial literacy can set your kids up for success in the future.
Use the Greenlight app to open a window to the world of money for your family. Provide an allowance to start. You can tie it to chores — or not. By giving an allowance, your kids can learn to manage money of their own. Then, help them set up Savings Goals and Investing — and watch them turn into money pros in no time.
6. Map out your retirement plan.
Preparing for retirement is one of the biggest financial tasks for most households. It can all seem quite intimidating, so it’s important to come up with a savings plan that feels doable.
Planning for retirement involves figuring out how much you need to save and then mapping out exactly how to get there with retirement contributions. You’ll also need to consider which investment accounts to utilize and how to invest your money for growth.
If you want personalized help, you might consider working with a qualified financial advisor.
7. Save with tax-advantaged accounts.
Taxes are inevitable, but you may be able to pay less by utilizing tax-advantaged savings and investment accounts. Here are just a few that you can take advantage of:
Individual retirement account (IRA): These accounts provide a tax break in the current year when you save for retirement. If you contribute $1,000 to an IRA, you won’t pay taxes on $1,000 of income. Depending on your tax bracket, this could save you $100 to $370 when you file your taxes.
Roth IRA: These accounts don’t provide an upfront tax break, but they allow investments to grow tax-free. When you eventually retire and withdraw funds, you won’t owe anything in taxes!
401(k): 401(k) retirement accounts are often available via employers. Like an IRA, they provide an upfront tax break — and your employer might even kick in extra money if they offer employer matching.
529 plans: A 529 plan allows parents to save for their children’s future college education. They come with significant tax benefits, including tax-free growth.
Health savings accounts (HSAs): Health savings accounts allow you to save for future medical expenses. You can get an upfront tax break when you contribute to one!
8. Improve your credit score.
Your credit score affects your ability to take out loans or open credit cards. It also affects the interest rates you’ll pay on debt. Credit scores range from 300 to 850, with 850 being the best possible score.
Improving your score starts with knowing where you stand. You can access a free credit report once per year at AnnualCreditReport.com.
From there, take steps to improve your credit score. This means you should make payments on time each month, reduce your debt levels, correct any errors on your credit report and only open new accounts when necessary.
9. Automate your finances.
Want to improve your financial wellness while also simplifying your life? Consider automating various tasks with the financial services and bank accounts you use:
Set up automatic student loan, credit card, and mortgage payments
Set up an automatic transfer from your checking account to your savings account each month
Make automatic retirement contributions each month
Prepay certain living expenses (like insurance) to cut down on monthly bills
Simplifying and automating personal finance tasks can help free up more of your time (and brain space!) for the things that matter most in life.
Take action to strengthen your financial future
Setting goals is an important first step toward improving your finances. The next step: taking action. This is where the magic happens. You can build actionable steps into your goals for the coming year and check in regularly to ensure you’re making progress.
Do your financial New Year’s resolutions involve your kids and teens? If so, learn how Greenlight can help the whole family.
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