The start of a new year is filled with promises of fresh starts and renewals. Many people use the calendar date of January 1st as a motivating reason for a life-changing improvement. Securely nestled in the top spots year after year are resolutions about health and finance. As many as 50 percent of adults in the United States make New Year’s resolutions. However, fewer than 10 percent keep them. 

When making a resolution it is best to build sustainable habits that will last long-term, instead of meeting a single goal that is either a pass or fail. In the case of financial resolutions, it starts with doing a complete self-assessment of all after-tax income and expenses. The more honest you are at this stage, the more you will help yourself achieve your objectives.

The next step is formulating a budget. All of your obligatory expenses, such as rent and utilities, should consume approximately 50 percent of your income. The remaining half should be split as follows – 20 percent towards debt repayment and savings and 30 percent towards discretionary spending. The standard 50/20/30 formula is recommended as a smart way to reach financial goals.

If your resolution is solely-based on becoming debt-free, then make that the focus of your budget. Instead of spending 30 percent on voluntary expenses, raise the percentage amount that goes towards bill repayment. On the other hand, if your goal is to save for a rainy day, contribute more money to savings. Open a separate rainy day account that you can contribute to throughout the year.

For some people, the new year is the motivation they need to search for a higher-paying job. Before transferring, consider the financial costs you might incur with a new company, such as commuting costs, wear and tear on your vehicle, health insurance coverage, or daycare.

Many people have employer-backed term life insurance policies, but for some, the idea of getting any life insurance is in itself a new year’s resolution. In addition to new year’s day, the motivation for this type of decision is a significant life event such as the addition of a baby, a new house, or a car. These might spawn a need to protect their families in the case of an unfortunate tragedy. 

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