10 ways to be better off a year from now

New Year’s resolutions can’t be that important, or we would still be talking about them beyond January.  But like year-end market predictions, they can provide us with a source of amusement a year from now at the very least.

On the other hand, if you want to look back twelve months from now and see some actual improvement in your financial life, I suggest finding a handful of simple, measurable tasks to accomplish in the year ahead, something you can physically check off a list instead of some vague, aspirational I’m-going-to-be-a-better-human-being resolution.

Need some ideas?  There’s at least one item on this list for you whether you’re young or old, rich or poor, and no matter how much money you make:

• For 30 days, track every dollar you spend. Record every expenditure – large and small – in a notebook or an app on your phone.  You’ll learn where your money goes and discover ways to plug your spending leaks.  Later, you can use this information to develop a realistic spending plan, regardless of your age or financial condition.
• Save $1,000. It’s a tangible, measurable, and likely attainable goal.  Ultimately, set your sights on creating an emergency reserve equal to 30% of your annual net income.
• Sell $250 worth of clutter. It will create some cash for your emergency reserve and make it easier to walk around your basement without tripping.
• If you have a 401(k) or similar retirement plan at work, commit to saving at least as much as it takes to get the full employer match, if any. If your employer doesn’t offer a match, or if you’re already getting all of it, boost your contribution rate by 1%.
• Invest in something that pays regular dividends – shares of stock or a dividend-focused mutual fund (or ETF), for example – and reinvest those dividends If you’re new to investing, it will show you how money compounds on itself over time, and it will teach you how you can actually benefit when share prices decline, both valuable lessons.
• Pay off all of your credit cards (or at least the one with the biggest balance due). You’ll pay less in interest and get money compounding for you instead of against
• Make the equivalent of one extra mortgage payment this year. It will save you interest charges and get you one month closer to being debt-free by the end of the year.
• Read one of these three books:
  • The Richest Man in Babylon by George S. Clason
  • Think and Grow Rich by Napoleon Hill
  • The Psychology of Money by Morgan Housel
• Set up a recurring monthly contribution to a charity of your choice. There may be some tax benefits, but at the very least it will help someone who needs it, and it will make you feel good at the same time.
• Start creating your legacy. At a minimum, draft a valid will and update beneficiaries on all insurance policies, IRAs, and retirement accounts.  Even better: talk to an estate attorney about living trusts, durable powers of attorney, and health care directives.

If you’ve got an idea, feel free to share it with me sometime.  Better yet, get in touch with me a year from now – and tell me how much better off you are.

12 Financial Resolutions for 2021 (raymondjames.com)

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