I think everyone can agree that 2020 as a year was a bit of a bummer. Let’s start off 2021 right by making some New Year’s resolutions that you can actually accomplish.
Every year, we make promises to ourself to go to the gym more, eat healthier, and try to be happier. This is all great but I challenge you to make a few resolutions that will make a difference in your financial stability this year.
Not sure where to start in 2021? Use these easy New Year’s resolutions to start seeing progress in your net worth, savings, and financial security.
You’ll see that these are all actionable and easy to do quickly. Stop putting off building your wealth and take advantage of these simple resolutions.
1. Up Your Retirement Contribution
This will take literally 30 seconds to do and can have a huge impact on your retirement savings. If you have a 401k, 403b, or IRA that you contribute to regularly from your paycheck, increase your contribution rate by 1%. Bumping up your contribution by only 1% will have minimal impact on your after-tax income but goes a long way towards growing your retirement account.
If you can handle more than 1%, go ahead and bump it up even more. Experts say to target at least 15% of your income for retirement but it is ok to start lower if you can’t match that level yet. If you get a raise or promotion this year, increase your contribution again to take advantage of that increase.
2. Pause a Subscription for 6 Months
Do you know how much you are actually paying per month in subscription services? A study showed that most people guessed around $80 per month but they actually pay around $238 per month. If you are like many people, you are probably paying for subscriptions that you are not really using.
For your New Year’s resolution pick one of your current subscriptions and pause or cancel it for 6 months. See how much it impacts your life during those 6 months, and then you can decide if you want to renew it again. You’ll probably see that it’s not really needed and can be cut out completely.
For example, consider canceling your Hulu subscription if you also have Netflix and Amazon Prime. I’d bet that there is plenty of content to watch on one streaming service and you don’t really need them all. If you get bored, pick up a free book!
3. Start a Side Hustle
More income will let you save more and do more. Side hustles are the perfect way to make extra money that you can use to invest or pay down high-interest debt. Going into the New Year, pick a side hustle that is easy for you to work on in your spare time. If you have limited time as it is, choose something that in straight-forward and will work around your schedule.
Here are some ideas on side hustles that you can start right away.
If you already have a side hustle, make the resolution to expand it to be more profitable. See if there is a way to scale up by getting more clients or simplifying your process. Try to automate or outsource your side hustle as much as possible so that you aren’t stuck doing everything.
4. Track Your Finances for 12 Months
Make the resolution to write down all of your income and expenses every month for a year. This will serve two purposes: to determine your monthly budget and to track your net worth.
Get in the habit of analyzing your finances on a regular basis so that you can see where to improve. Create a budget to show exactly how much you are saving each month. A budget will also alert you if your expenses start to creep up and if your income decreases.
Tracking your financial statements also lets you calculate your net worth. Over the course of the year, you should see your net worth increase in value as you add assets and decrease debt. Learn to use a consistent method of tracking your finances, whether it is with a spreadsheet or a free automated personal finance app.
5. Invest $1,000 in Something New
If you haven’t started investing, your goal for the year should be to put your first $1,000 into some sort of investment. I recommend starting with a combination of an S&P 500 Index fund and crowdfunded real estate.
If you already have investments, your New Year’s resolution should be to branch out into another form of investment. Diversify your portfolio by trying something new, like real estate, gold, or fine wine. Need some ideas? Check out our full list of ways to diversify your portfolio.
6. Learn a New Skill
Invest in yourself by making the resolution to learn a new skill this year. This can be something small and doesn’t have to be anything too complicated, or something you have to pay for.
The best type of skill is something that you can translate to making or saving money. Spend some time researching how to improve your side hustle, business, or day job to become more profitable. If you run a website, take some time to learn a new skill such as using ad retargeting pixels, analyzing your website traffic, or performing A/B split testing. Then, use that skill to become more profitable.
Some skills are more fun than anything else. These are ok, too, because they bring joy to your life and get you in the habit of learning and thinking creatively. For example, I just learned how to solve a Rubik’s cube. That skill would be hard to monetize if you’re not a pro at it, but is a great brain teaser to get me thinking differently.
7. Pay an Extra $10 Towards Your Debt
Set the goal to pay a little extra towards your loans so that you can pay them off faster and decrease the interest you have to pay. Focus on your highest interest debt first and pay an extra $10 per month towards the principal. You won’t feel $10 in your monthly income but an extra $120 per year will help to pay down your debt faster.
Can you afford to pay more? Make the resolution to pay as much as you can towards your debt without seriously impacting your savings. Try rounding up to an even number each month. If your loan is $167 per month, round it up to $200 or even $300. You’ll start to see how much faster you can pay it off that way within just a few months.
8. Create an Asset for Passive Income
Not all assets and income sources have to be purchased. You can create a passive income stream by building something upfront that can be sold forever. By spending your time and effort, there are plenty of things that will start making money without having to buy it.
Going into the New Year, make the resolution to create your own money-generating asset. This can be writing a book, starting a blog, building an ecommerce website, or creating a course. All of these take some effort upfront to get them started but will continue to make money for years once launched. Passive income is the best way to build your wealth since you don’t have to trade your time on an hourly basis every time you want to get paid.
9. Start a “No Spend” Weekend Tradition
Once a month, set aside a weekend where you and your partner don’t spend any money. Make the resolution to simply cut out any expenses for that particular weekend and save that money instead. By reducing your monthly expenses this way, you’ll be able to save more and put more towards paying off your debt.
This may sound tough, but it gets easier with some practice. Instead of eating out or getting takeout food, choose to cook in for the weekend. Have friends over to your home for a game night instead of going out to a bar or other activity. Choose entertainment options that are free, like going for a hike, going to a park, biking, or having a backyard picnic. Avoid swiping your card for a full weekend and you’ll see how that saving can add up.
10. Treat Yourself Every So Often
Building wealth takes time, effort, and dedication over many years. With the right tools and mindset, you can certainly reach whatever financial goals you want. That said, it can get tiring to watch every penny you have and make sure that you are saving and investing. As my wife and I say, we want to build for our future but also enjoy life today.
To do this, it is ok to occasionally treat yourself to something fun and makes you happy. Go on that vacation. Buy that nice meal on your anniversary. Splurge on your hobby. Do what makes you happy.
The key is to do it in a way that doesn’t hurt your larger financial goals. Don’t make it a habit or over-spend to the point where you aren’t saving and investing as much as you should. Learn to pay yourself first but set aside a small budget so that you can enjoy life now.
Here’s to a happy, healthy, and financially successful New Year in 2021!
