Tips for a Financially Savvy New Year

Creating intentional and manageable financial goals for the new year is an excellent way to make every dollar count. Here are five quick tips for making financial New Year’s resolutions:

1. Create and stick to a budget: Establish a realistic budget that considers your income, expenses, and financial goals. Regularly track and review your spending to ensure you stay on track throughout the year. Take our Financial Health Check-Up to determine your current financial status and pinpoint areas for improvement.
2. Build up an Emergency Fund: Commit to building or replenishing your emergency fund. Aim to save at least three to six months’ worth of living expenses in a readily accessible account to provide a financial safety net in case of unexpected expenses or job loss.
3. Reduce debt: Develop a plan to pay down high-interest debt. Prioritize debts with the highest interest rates and consider consolidating loans or negotiating with creditors to improve your financial position. If you’re feeling a financial pinch, consider the “Snowball Method” – pay down the smallest debt as quickly as you can (without jeopardizing your overall financial picture) and then take the funds you were putting towards that payment and use it to pay down the next-smallest debt owed. This process would continue until all debts are paid off.
4. Invest for the future: Whether through retirement accounts, stocks, or other investment vehicles, commit to investing for your future. Review and adjust your investment strategy based on your risk tolerance, financial goals, and market conditions. The Risk Tolerance Quiz at BPAS University is a great place to start!
5. Stay informed: Dedicate time to enhance your financial literacy. Educate yourself on personal finance topics such as investing, taxes, and retirement planning. BPAS University offers a variety of resources – and is updated regularly!

What if I’m nearing retirement?

Your financial resolutions may be different if you’re close to retirement age:

1. Maximize retirement contributions: Resolve to make the most of your remaining working years by maximizing contributions to workplace retirement plans such as 401(k) or 403(b) plans, as well as your IRA or other retirement accounts. Catch-up contributions for workplace retirement plans are available for individuals nearing retirement age, allowing you to boost your retirement savings and take advantage of potential tax benefits.
2. Make a plan for reliable retirement income: Develop a detailed plan for how you’ll generate income in retirement. This may involve assessing your Social Security options, evaluating pension benefits, and strategically withdrawing funds from various retirement accounts. Consider consulting with a financial advisor to ensure your plan aligns with your goals and takes into account factors like inflation, healthcare costs, and potential market fluctuations.
3. Review – and adjust – your investment portfolio: As you approach retirement, it’s crucial to reassess your investment portfolio to align with your changing risk tolerance and income needs. You may consider a shift towards a more conservative allocation to protect your savings from market volatility. Or, you may want to diversify your investments to mitigate risk. Periodically review and rebalance your portfolio to ensure it remains in line with your financial objectives. This can help safeguard your nest egg and provide a more stable income stream during your retirement years.

Finally, it’s important to celebrate financial wins – big or small. Celebrating financial wins is more than just acknowledging the numbers; it’s a moment to recognize the discipline, hard work, and smart decisions that contributed to your success. Whether it’s paying off a debt, reaching a savings milestone, or achieving an investment goal, take a moment to recognize the satisfaction of your financial achievements and use them as motivation for future endeavors.

Ready to learn more? Visit u.bpas.com to get started!