New Year, New You. 6 Good Money Resolutions for 2019
by Lyle Daly | Feb. 6, 2019
In theory, we can commit to new goals any time we please. In practice, the vast majority of us are going to do it around the new year.
That makes it the ideal time to set some good money resolutions that you can commit to for 2019. No matter your financial situation, the following resolutions can put you in a better place at the end of the year.
1. Figure out your long-term financial goals
Where do you want to be financially a year from now? What about five years, or 10?
A lack of long-term planning is what dooms so many people to the practice of treading water financially. They don't have a vision to work towards, so they stay in more or less the same position.
Don't just go with the flow. Map out where you want to be at different intervals of your life. Examples include:
- I'm going to save $5,000 this year.
- I'm going to save $50,000 for a down payment on a house within five years.
- I'm going to have at least $100,000 combined across my retirement accounts within 10 years.
2. Save an extra $100 per month
Saving money is the best thing you can do for yourself, and a common recommendation is to save at least 30% of your income. Unfortunately, most people fall well short of this mark, and some don't save anything at all.
Give your savings a boost by committing to at least an extra $100 per month. Why $100? It's a fairly easy target to hit, as you could realistically come up with an extra $100 by cutting the cord on an expensive cable package or staying in one or two more nights instead of going out. That being said, your efforts will add up, and at the end of the year you'll have banked $1,200.
If you think you can do more, then by all means, commit to more. To make sure you follow through and to earn more back on what you save, set up an automatic payment to a high-interest bank account each month.
3. Pay off your credit cards
Credit card interest rates tend to be on the high side, and they've only been going up. That's bad news if you're carrying balances on your cards.
Since credit cards offer a revolving line of credit and you can keep spending up to your limit, it's easy to fall into a cycle of paying interest month after month and seeing your balance get bigger, not smaller.
If you have any credit card debt, paying it off will save you money and take a lot of weight off your shoulders. Calculate how much it will cost you per month to pay everything off within the year, and if you have a large amount of debt, consider balance transfer cards with a 0% intro APR.
4. Move up at least one credit score range
A better credit score can bring you all kinds of benefits, such as helping you qualify for the best credit cards, getting you lower interest rates on loans or mortgages, and possibly even lowering your car insurance premiums.
With smart money habits, your credit score can go up quite a bit over the course of a year. Here's what you should focus on to improve your score:
- Pay everything on time for a positive payment history.
- Reduce your credit utilization or maintain a low utilization.
- Avoid applying for too many new credit cards or loans.
5. Increase your retirement contributions
Retirement is an area where people often shoot themselves in the foot by saving too little or waiting too long to start saving. Considering how much money you can make through compounding when you contribute consistently to a retirement account, there's really no way you can save too much.
If you up your retirement contributions, it will make a big difference in how much your nest egg grows in years and decades. Let's say you put that extra $100 you're saving per month in a retirement account that averages an 8% annual return. In 30 years, that account will be worth $135,939.85 -- almost $100,000 more than you personally put into it.
6. Be more mindful about your spending
We have more ways than ever to spend money, and you can make purchases on your phone, computer, or tablet in a matter of seconds. That can be convenient, but it can also lead to buying things you don't need. Then you look back a month or two later and wonder, "Why'd I buy that?"
To avoid situations like this, give yourself more time to think about purchases before clicking that Buy button. If it's not something you absolutely need or something that fulfills a passion of yours, take a week or two to think it over.
Better money management in 2019
A lot can happen in a matter of a year. Whether it's for better or for worse depends in large part on the goals you set and how committed you are to them. By picking the right money resolutions and following through, you'll end 2019 much better off than you started it.
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