Don’t make your 2022 New Year’s resolution just another saying. This is the year to be intentional and see your resolution through. This is particularly true if your resolution has anything to do with your finances. Investing the time and effort into your financial well-being in 2022 will set you up for success in the years to come.
All that said, resolutions are likely to be forgotten after the first of the year. It’s easy to go into the new year with a goal, but quickly get swept up in daily routines and tasks. That’s where we come in. Here we’ll discuss three ways to make your new year’s financial resolutions stick and count.
1. Improve Your Credit
Maybe you are trying to build up to a good credit score or you are looking to reverse some bad credit decisions. Either way, improving your credit is a great financial resolution. Your credit says a lot about your financial health, and determines what kinds of loans you’ll be able to take out. Getting on top of your credit and making it a priority can benefit you in the long term.
A secured credit card is a great way to start building credit on everyday purchases, services, and expenses. With this type of card, your credit limit is determined by an initial deposit or funds transfer. In essence, this type of card helps limit the amount you spend, which ensures you don’t run into unnecessary debt. It’s easier and safer to build credit this way than with a credit card that has unlimited spending.
Having an actionable way to improve your credit — such as with a credit builder card — is essential to making this resolution count. But boosting your credit score takes time and you won’t see results overnight. Be patient and keep monitoring your scores annually to see how you are making progress.
2. Look at Refinancing
If you’re looking to lower your monthly payments on your home, it may be worth considering refinancing your mortgage. With refinancing, you’re basically trading in the current cost of your mortgage for a newer one. Your lender will use the new mortgage to pay off the old one.
The main benefits of refinancing are paying a lower mortgage each month and having the ability to cash out regardless of the duration of equity. And since mortgage rates have been at historic lows, looking into refinancing in 2022 could be a smart financial decision. While refinancing is less of a process than buying a home, there are still lots of steps to take. It can take a while — upward of 45 days or so — to complete the process.
Before you begin, ensure you have all the necessary documents and choose a lender that can walk you through the process. Again, it’s not a turnkey process. So you want someone on your side who can help answer all of your questions. Best of all, having a lender you trust can help motivate you in the new year to stick with your goal of refinancing!
3. Start Investing or Invest More
Investing can be an intimidating part of the financial world. If you’ve never invested before, you may not know how to start or even where to begin. That said, you can easily invest if you have an IRA (individual retirement account) or a 401(k) through your employer. You can typically max out your yearly IRA contributions at $6,000 and up to $20,500 in a 401(k).
You aren’t taxed on the money you put into these accounts, so it’s a benefit to max out both of them if possible. This money will be a nice cushion when you do decide to retire. But in addition to these two accounts, you may also want to consider investing in a taxable account. A taxable account allows an investor to deposit funds and buy or sell investments.
If you’re looking to invest in the new year, you may want to consider a robo-advisor. A robo-advisor is just a financial advisor that uses an algorithm to automatically select investments for your account. You decide what your financial goals and risks are, and they essentially do all your investing on your behalf. They are a great option if you want to stay accountable for your investment goals but don’t have a lot of time.
The new year is quickly approaching, and with that, your lofty resolutions are likely starting to pile up. No matter what your financial goals are, getting started is often the hardest part. Set up accountability factors such as checking in at the beginning of each month, or setting up an automatic investment plan. Automating as much as you can will help ensure you are sticking with your plan throughout the entire year.
Lastly, remember that having a plan is key. Write down your financial resolutions in a prominent place such as your wall calendar or your journal. Seeing them displayed will be a constant reminder for you as the days, weeks, and months of the new year continue. Make 2022 your year to conquer your financial and monetary goals.