Financial New Year's Resolutions That You Can Actually Keep

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Concord Wealth Partners December 29th, 2021

Everyone loves making New Year’s resolutions, but surely, not everyone is likely to keep them. Here are five resolutions to help you improve your financial life and hopefully encourage you to keep them next year.

Resolution 1: Pay Down Your Debt

Debt is neither intrinsically good nor evil, depending on how it is used—it is merely a tool. For most people, some level of debt is a practical need, particularly when purchasing a sizeable long-term asset that must be paid back over time, such as a home. However, issues develop when debt becomes a burden rather than a tool. Try and keep a manageable debt load and work on eliminating high-cost, non-deductible consumer debt.

Resolution 2: Update Your Budget

Smart saving and investing during your working years should result in a higher net worth over time. Having a comprehensive budget and net worth statement might assist you in staying on track with your financial plans. Here are steps that can help:

  • Pay Yourself First. At the very least, have a budget that includes three items: how much you take in after taxes, how much you spend, and how much you save. If you’re unsure where your money is going, track it for 30 days with a spreadsheet or an online budgeting tool. Determine how much money you’ll need to cover your set monthly expenses, such as rent or mortgage payments and other living expenses, as well as how much you’d like to save for other goals.
  • Estimate Your Net Worth Annually. Make a list of your assets (what you own) and deduct your liabilities (what you owe). Subtract your liabilities from your assets to get your net worth. Don’t be concerned if your net worth falls during a market downturn. What matters is that you notice a general upward trend throughout your earning years.
  • Prepare for the Unexpected. We recommend setting aside three to six months’ worth of necessary living expenditures in a savings account to create an emergency fund. The emergency fund can assist you in covering unforeseen expenses without having to liquidate other investments.

Resolution 3: Optimize Your Portfolio

We all want to improve our investment performance. Work with a qualified financial advisor who can help you devise a strategy and help you remain disciplined in a variety of markets. Here are some suggestions to help you keep focused on your goals:

  • What’s Your Investment Mix? After committing to a savings plan, the next most crucial decision is how to invest. Have a specific asset allocation—that is, a portfolio’s overall mix of stocks, bonds, ETFs that you are comfortable with, even in a down market. Check that it is still in line with your long-term goals, risk tolerance, and time schedule. The larger your time horizon, the more time you’ll have to profit from up or down markets.
  • Diversify, Diversify, Diversify. Diversification could help minimize risk and be an important aspect of achieving your goals. Exchange-traded funds (ETFs) are excellent ways to invest in virtually any asset class.
  • Monitor and Rebalance Your Portfolio as Needed. Your asset manager and financial advisors should offer you portfolios that are constantly monitored and rebalanced.

Resolution 4: Protect Your Estate

Having an estate plan isn’t just for the rich and famous. Everyone and anyone can take steps to protect their assets, small or large. Attorneys and tax officials will decide the fate of your possessions or minor children if adequate beneficiary designations, a will, or other fundamental measures are not taken. Taxes and attorney’s costs can chip away at these assets and postpone distribution at a time when your heirs most need them. Here’s how to safeguard your estate—and the lives of your loved ones:

  • Keep Beneficiary Information Up to Date. Ensure that the proceeds of life insurance policies and retirement funds are aligned with your preferences, your will, and other documents.
  • Prepare or Update Your Will. A will is more than merely transferring assets. It can offer support and care for your dependents, as well as assist you in avoiding the costs and delays associated with not having one at the time of death. We recommend collaborating with an experienced lawyer or estate planning expert while preparing a will.
  • Assign Durable Powers of Attorney for Health Care. Appoint trustworthy and capable confidants in these documents to make choices on your behalf if you become incapacitated.
  • Have a Revocable Living Trust. This is especially necessary if your estate is complex, and you want to lay out how your assets should be utilized in detail, or if you have dependent children and want to spell out how assets should be handled to support them, who will manage the assets, and other complexities. A living trust may not be necessary for minor estates when beneficiaries, titling, and a will are sufficient, but consult with an experienced financial advisor or attorney to be certain.

Resolution 5: Have Contingency Plans in Place

Risk is a natural aspect of life, especially when it comes to investing. Your financial life might be disrupted by various unexpected events, such as illness, job loss, disability, death, natural disasters, or lawsuits. The guidelines below can assist you in preparing for life’s unexpected events:

  • Protect Against Big Medical Bills. Choose a health insurance policy that meets your needs in terms of coverage, deductibles, co-payments, medical providers, and the emergency room.
  • Get life insurance. If your employer provides it, take advantage of group term insurance coverage. You may require additional life insurance if you have little children or big responsibilities that will persist after your death and that you cannot self-insure.
  • Get Property-Casualty Insurance. Re-examine your homeowner’s or renter’s insurance plans, as well as your auto insurance policies, to ensure that your coverage and deductibles are still appropriate for you.
  • Have a Disaster Plan in Place. If floods or earthquakes are a risk in your region keep an up-to-date video inventory of important household objects and assets, as well as any expert assessments and replacement value estimates, in a safe location, away from your home.
  • Keep a Portable Hard Disk Inventory of Crucial Documents. Keep copies of birth certificates, passports, wills, trust documents, home renovation records, and insurance policies in a small fireproof safe that you can grab quickly if you need to escape immediately.
    The good thing about Financial New Year’s Resolutions is that you don’t have to do it all alone. Reach out to your financial advisor and give them your Financial Resolutions list. A good advisor should help you prioritize the items on your list based on your short and long-term goals.

But most importantly, the right advisor will help you stay on track through your 2022 journey.


Concord Wealth Partners
Concord Custom Wealth Group

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for their own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and are not intended to be reflective of results you can expect to achieve. Rebalancing does not protect against losses or guarantee that an investor’s goal will be met. Investing involves risk, including loss of principal.

This information is general in nature and not intended as specific, individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, please consult with a qualified tax advisor, CPA, financial planner, or investment manager. Please consult with your tax advisor on the deductibility of a home equity line of credit interest payments for your specific tax situation. Diversification and asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. A bond ladder, depending on the types and amount of securities within the ladder, may not ensure adequate diversification of your investment portfolio. This potential lack of diversification may result in heightened volatility of the value of your portfolio. You must perform your own evaluation of whether a bond ladder and the securities held within it are consistent with your investment objective, risk tolerance, and financial circumstances.

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The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

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