Five financial resolutions for the New Year

In order to make improvements to your financial position, it's necessary to take a step back and understand where you should be focusing. This is a great time of year to evaluate where we want to improve in the coming year. Here's a list of items that can benefit all of us.  
 

1) Increase the amount of money working for you

You want as much of your income working as hard for you as possible. This money can be used to enhance your financial position in some way (investing, paying down debt, etc..). The only way to increase this amount is to earn more or spend less. Here’s an example;
 

Income = $50,000 

Expenses = $40,000 

Working Money = $10,000 or 20%  

It’s important this money works hard for you by either earning interest or paying down debt. Some people call this a savings rate or investing rate, but it's really the percent of your money you're putting to work. If your current rate is 10%, shoot for 15% - 20% this year. Look for ways to increase income or reduce expenses to meet your goal.  
 

2) Stay the course if markets drop   

None of us know where the financial markets are headed, but they've been running up for a long time. At some point there will be a correction and it may very well be this year. If it happens, it'll be important to stay the course and not overreact to what will be a temporary setback. If you're confident in how you're investing and managing your finances, staying the course is always the best option. 

3) Diversify income streams 

Many people rely on one source of income. This creates a huge financial risk in the event of a layoff, disability or anything else that could threaten your livelihood. This year is a great time to start thinking about diversifying income streams the same way we diversify our investments. Spread your eggs into more than one basket. Side hustles and dividend stocks are a good place to start. 
 

4) Build wealth slowly

Everyone wants to get rich quick, but the surefire way to wealth is to do it slowly. More millionaires have been made by living below their means and investing the difference than any other method. So while there might be a hot investment out there, have faith in your plan and continue to execute.  
 

5) Spend on things that matter and not on things that don't 

Rather than simply trying to reduce expenses, I think it's more important to spend where it matters to us and cut back where it doesn't. Life is empty if we're not doing the things we're passionate about. Just be sure you spend where it matters to YOU.

We're all different people with our own unique priorities. Live life they way YOU want, but cut back your spending that's not enhancing your life.