Most Common Financial New Year's Resolutions

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C., area who works with clients virtually across the country. Dream Financial Planning is a Fiduciary Financial Planning firm specifically designed to help individuals at any stage of life take control of their finances and fulfill their dreams. Feel free to schedule a Free Consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

As the New Year rolls around, now is the perfect time to take stock of your current financial health and set goals for the upcoming year. Financial New Year’s resolutions are a great way to take control of your finances, build wealth, and develop healthier money habits. If you'd like a partner in improving your financial health feel free to contact me to Get Your Free Retirement Check Up. All you have to do is download our app, enter some information, and schedule a free consultation. During this call, we'll review the deliverables below.

• Elements® Financial Monitoring App
• One Page Financial Plan
• Financial Independence Presentation

Here are the most common financial New Year's resolutions and tips to help you achieve them.

1. Save More Money

One of the most common financial resolutions is to save more money. Whether it’s building an emergency fund, saving for a home, or setting aside money for future vacations, saving is often at the top of people's lists. However, daily expenses can quickly sideline this resolution without a clear plan.

Here’s how to set yourself up for success if your goal is to save more money:

• Set Specific Goals: Determine exactly how much you want to save and by when. For example, instead of saying, "I want to save more money," say, "I want to save $5,000 by the end of the year."
• Automate Your Savings: Set up automatic transfers from your checking account to your savings account. This makes saving a habit and removes the temptation to spend that money elsewhere. There are also apps you can download that automatically take money from your checking account and put it in your savings account as a true “set it and forget it” solution.
• Cut Back on Unnecessary Expenses: Review your monthly expenses to identify areas for savings. Cutting back on your expenses means you’ll have more cash flow to save.

2. Pay Off Debt

Debt reduction is another top financial resolution. There are two main strategies for paying off debt. Choose the one that works for you and your situation.

Debt Avalanche Method

The debt avalanche method involves paying off the debt with the highest interest rate first (such as credit card debt).¹ This will save you money in the long run, as you’ll pay less interest.

Debt Snowball Method

The Debt snowball method involves paying off your smallest debts first while making minimum payments on larger ones.² As each small debt is paid off, the money can be applied to the next debt.

In addition to choosing a debt repayment method, set realistic monthly repayment goals and stick to them. Even small additional payments can make a big difference over time.

3. Create and Stick to a Budget

Many people set a goal to create and stick to a budget to gain better control over their finances. Budgeting helps you track where your money is going and ensures you’re living within your means. However, sticking to a budget can be tricky, especially if unexpected expenses arise. Here are some specific tips to help:

• Use Budgeting Tools: Plenty of apps, like Mint, YNAB (You Need A Budget), or even simple spreadsheets, can help you track your income and expenses. These tools make it easier to manage your budget and stay on top of your spending.
• Set Realistic Limits: Be realistic about your expenses. Allocate funds for fun and entertainment to avoid burnout, but don’t let those expenses derail your budget.
• Review Your Budget Regularly: Life circumstances change, and so should your budget. Revisit your budget at least every quarter to ensure it’s still working for you, and adjust it as necessary.

4. Invest for the Future

Another popular resolution is investing for long-term financial goals, such as retirement. However, many people don’t know where to start. But even starting small and gradually building an investment portfolio is a step in the right direction. Here are some tips to help:

• Start Small: You don’t need much money to start investing. Many brokerage accounts allow you to start with as little as $100.
• Contribute to Retirement Accounts: Maximize contributions to retirement accounts like a 401(k) or an IRA. If your employer offers a 401(k) match, take full advantage of it (their match is pretty much free money!).
• Diversify Your Investments: Don’t put all your eggs in one basket to reduce risk. Spread your investments across different asset classes, such as stocks, bonds, and mutual funds.

5. Build an Emergency Fund

Building an emergency fund is a tremendous financial New Year’s resolution. Most financial experts recommend saving 3-6 months of expenses, depending on your lifestyle.³ This emergency fund can be used for unforeseen expenses, such as a sudden illness or accident, an unexpected job loss, or a surprise home or car repair.

Here are some tips to help you get specific and achieve your goal of building an emergency fund:

• Start Small and Build Over Time: If you can’t save three to six months’ expenses immediately, start by aiming for one month’s worth. Gradually increase your savings over time.
• Open a Separate Account: Keep your emergency fund separate from your regular checking or savings account to avoid dipping into it for non-emergencies.
• Direct Part of Your Income to the Fund: Set up automatic transfers so a portion of your paycheck goes directly into your emergency fund. Treat it like a regular bill.

Setting financial resolutions is a great way to start the year, but sticking to them is the real challenge. With a clear, specific plan, you can achieve your financial New Year’s resolutions. Whether it’s paying off debt, saving more, or investing for the future, your 2025 financial goals are within reach!

Different Ways You Can Work With Us

Wealth Management - Combines ongoing financial planning and investment management. The financial planning fee is waived if we manage at least $1,000,000 in investments for you. You can review our investment management fee structure here. Tax Preparation and the ability to create a Will or Revocable Trust-based Estate Plan will be included.

Ongoing Financial Planning - Starting at $400/month, our most popular program now includes tax prep. This is a good fit if you have several goals and want the option to manage your investments. We'll cover everything from spending, insurance, taxes, investments, retirement planning, and estate planning. Our goal is to give you and your family an easy-to-understand comprehensive plan to provide you with confidence you're making the right financial decisions.

One-Time Financial Plan With Ongoing Support - Starting at $4,800, this is an accelerated version of the service above with additional support for one year after your start date. This service requires prepayment for the year and is offered at a significant discount from the annual pricing for ongoing planning. Tax Preparation and the ability to create a Will or Revocable Trust-based Estate Plan will be included.

Tax preparation is now part of the ongoing financial planning program. This will be in addition to the Tax Report we already generate for clients and our work with the IRS Withholding Calculator to help prevent our clients from getting a surprise tax bill.

Three-Hour Ask Me Anything - This is a good fit if you have 2-3 goals you want help with. These three one-hour meetings need to be completed within three months. The fee for this service is $2,000. You also get a free 30-minute meeting to help us get started.

Financial Coaching - Our financial coaching program starts at $99/month. This is ideal for someone who is looking to simplify and automate their finances. We'll also serve as an accountability partner and help you overcome obstacles that may be stopping you from accomplishing your goals. You can learn more about our coaching program here. If you think this program might be a good fit for you, schedule a 15-Minute Demo.

Hourly Financial Planning -Billed at $400 per hour. For each hour of meeting time, we'll bill at least one additional hour for meeting preparation and follow-up.

Our Full-Service Process For New Clients

Net Worth and Budget

The first thing I do for new clients is assess their current financial situation. We do this with the aid of financial planning software. We review assets, liabilities, income, and expenses. If you'd like to test drive my comprehensive financial planning software, visit Right Capital and create a profile. View this Right Capital video to learn more.

Insurance

As a Fee-Only Firm, we don’t sell insurance or charge commissions. However, we like to review home, auto, and umbrella insurance to ensure you have the proper coverage. We’re happy to work with your existing agent or refer you to an independent broker to ensure you get the best deal. We also look at your employee benefits, long-term and short-term disability insurance, along with life insurance to make sure your family is protected.

Tax Preparation and Tax Planning

Tax preparation is now part of the ongoing financial planning program. This will be in addition to the Tax Report and Tax Planning we already generate for clients. We also use the IRS Withholding Calculator to help prevent our clients from getting a surprise tax bill.

Investments

Whether you want us to manage your investments or you want to manage them yourself and you're just looking for a second opinion, we can help. We'll help you optimize your investments to make sure you’re not leaving any money on the table. Here’s an example of the quantitative analysis I can do for your investment accounts where we also evaluate your current fees.

If you’d like to review your risk tolerance, complete our risk tolerance questionnaire. This will give you your personalized risk number as seen on page 1 of the sample portfolio above. Feel free to check out the article 10 Best Tips for Beginning Investors from U.S. News where I shared a few investment tips.

Retirement Planning

This is where we bring everything together. Take a look at the links below for examples of some of the deliverables we prepare for clients.

• Get Your Free Retirement Check Up
• Elements® Financial Monitoring App
• One Page Financial Plan
• Financial Independence Presentation

Estate and Legacy Planning

If you're looking for a cost-effective solution to get your estate planning documents in place, we can help. We have partnered with a leading Estate Planning platform to deliver high-quality Estate Planning documents for a fraction of the cost of working with an attorney. I included a blog post below that highlights the key documents that should be in your Estate Plan and my normal pricing.

What's In Your Estate Plan?

Revocable Living Trust-Based Estate Plan

• Individual - $1,600
• Couple - $2,100

Will-Based Estate Plan

• Individual - $900
• Couple - $1,400

I hope we get the opportunity to work together. If you'd like to see if any of these services are a good fit for you, feel free to schedule a free consultation or send me an e-mail.

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