View of a new years resolution paper in typewriter, "This year I will"

Top New Year financial resolutions

Dec 29, 2020
Empower Insights

Smart steps you can take to gain control of your savings next year

This year is the year.

A fresh start.

You mean it this time.

For real.

OK, while you may be more serious than ever about finally getting all your finances in order, you know it’s easier said than done to keep a New Year’s resolution. Things come up. Excuses pile up. People give up. With so many reasons to throw in the towel and try again in another 12 months, it’s no surprise that 80% of all annual pacts are abandoned by February as that restored optimism begins to fade.1

But it doesn’t have to be that way.

Once the calendar turns to January 1, there are several steps you can take — and strides you can make — to keep going strong all year long. Whether you choose to focus on the lifestyle you have today or the one you want tomorrow, it helps to rely on the same recipe for success.2 Set a savings goal that is:

  • Specific: Be precise. Instead of saying, “My New Year resolution is to save money,” put an actual number on it. If you want to contribute more to your 401(k) account, determine an exact value like 10%.
  • Attainable: Be practical. Socking away $1 million in 2021 sounds amazing, but it may not a realistic target for everyone. Establish reasonable expectations that fit with your income or salary.
  • Durable: Be persistent. Mistakes happen. If you slip up along the way, pick up the pieces and stick with it.
Set savings goals that are Specific, Attainable, Durable.

Why are these ground rules so important? Studies show most New Year’s resolutions fail because they don’t follow some sort of strategic playbook.3 But you’ve got this! Now that you’re ready to   create a New Year savings plan (because you’re not messing around anymore), all you need is a great idea.

Here are 10 really great New Year financial resolutions:

Speak regularly with your spouse

Catching up with your significant other on a consistent basis to discuss your hopes for retirement is a healthy hobby that can “pay off” in the long run. Schedule frequent conversations with your partner, on a weekly, monthly or quarterly basis, to review your long-term approach and discuss your future.

Designate a no-spend week or month

No frivolous shopping. No impulse purchases. No eating out. No travel. Only budget for the bare essentials, like food, gas and healthcare, as well as for your normal household bills. Think needs versus wants.5

Meet your match

Some call it “free money.”4 If you’re leaving extra dollars on the table in your workplace retirement plan, raise your deferral rate to maximize the full employer-matching contribution and grow your nest egg.

Talk with a financial advisor

Leave it to a professional. Getting guidance can help steer you in the right direction when you’re stuck in neutral. By the end of the year, seek out human advice and arrange an appointment with a financial advisor.

Kick a costly habit

Maybe it’s your daily gourmet coffee, a premium movie channel package or that afternoon sweet treat.6 Little things add up. See if you can cut one of your pricey patterns to put more money back in your pocket.

Build an emergency fund  

Cars deteriorate, basements flood and arms break. In other words, life is full of surprises. Expect the unexpected and stow away a fixed amount of cash to avoid debt and cover those unforeseen expenses.

Refinance your student loan

When it comes to your student debt, you may not be stuck with the “agreed-to” terms and details forever. Depending on how much you owe, you may be eligible to rework your loan to secure a lower interest rate, reduce your monthly payment and free up additional funds to allocate to your other pressing priorities. 

Listen and learn

Every weekend or month, download and tune into a different financial or investing podcast.7 Or, if you’re too busy, commit to reading a personal finance book once per quarter. After discovering a wealth of savings tips and tricks, you may even become an expert yourself. 

Create a will

A will ensures your final wishes will be carried out as you intend. Without one in place, your estate could go through a lengthy process known as probate, which involves the courts dictating how your assets are distributed.

Organize a formal plan for retirement

Regardless of whether you’re early in your career or nearing the finish line, your golden years will be here before you know it. Put pen to paper and draw out your official itinerary for your “next adventure.”

Write down where you want to live, when you want to collect Social Security and what you want to do for fun.

If you are looking for more New Year financial resolutions, check out this article from Personal Capital.

Help your resolutions come true with an Empower Investment Account

1 Mike Bebernes, Yahoo News, “Are New Year’s resolutions doomed to fail?,” December 2019. 

2 Sarah DiGiulio, NBC News, “7 (totally doable) New Year's resolutions that will change your life,” December 2017.

3 Erin Jensen, USA TODAY, “2020 really could be a New Year, new you! How to keep those resolutions,” January 2020.

4 Finra.org, “Why Leave Money on the Table—Make the Most of Your Employer's 401(k) Match,” December 2019.

5 Alicia Adamczyk, CNBC, “Why you should participate in No Spend November this year,” October 2019.

6 Chris Kornelis, Wall Street Journal, “The Biggest Ways People Waste Money,” June 2019. 

7 Kara Cutruzzula, Time, “The 10 Best Finance Podcasts of 2020,” November 2020.

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