4 Essential Financial Resolutions For 2019 (And How To Reach Them)

Welcome to the new year! If you’re like most people, you rang in 2019 with dozens of resolutions. And plenty of those are probably about money. Unfortunately, too many people get so wrapped up in trying to do everything right financially that they fail before February arrives.

So throw out your list of new year’s resolutions. This year, focus your efforts on four achievable but life-changing financial resolutions. They’ll create major changes not just for your new year, but also for your entire financial future.

So, without further ado, here are your four financial resolutions for 2019 and your action plans for getting them done!

Resolution #1: Build a Security Buffer

Protecting yourself is one of the Four Pillars of Wealth. And a safety net is precisely the tool you need to create solid protection for yourself and for your family. When it comes to building a safety net, you need two essential components. And the first is an emergency buffer that’s a key element of your Cash Bucket.

Simply put, your Security Buffer is an emergency fund you can tap into in the event of a true emergency to cover your basic living expenses. So set aside enough money to cover at least three months — but preferably six to twelve — of your costs. (Remember: A true financial emergency is a medical crisis or a job loss . . . not an amazing sale at the mall!)

Your Action Plan for 2019:

  1. Open a savings account devoted specifically to your Security Buffer.
  2. Set up a recurring bank transfer that automatically transfers money to your buffer’s account within 72 hours of receiving a paycheck. (This is called Paying Yourself First!)
  3. Keep adding to your Security Buffer until you reach your target balance.
  4. If you do need to tap into your funds to cover expenses in an emergency, repeat steps 2 & 3 above.

Resolution #2: Get your insurance in place

If a Security Buffer is the first essential component of a safety net, the second is protection through insurance.

Insurance is available in two must-have flavors: First is general insurance covering your home and its contents, your car, your medical care and your business. Then there’s personal insurance protecting your income in the event of your disability or death.

For many people, the natural hurdle to buying insurance is the idea they’re throwing money away on something they’ll never use. And, of course, you hope that you’ll never experience an accident, a medical emergency or a death. But you need to be prepared financially in the event that something tragic does happen.

Your Action Plan for 2019:

  1. Assess which types of insurance are necessary for your family and lifestyle — home or renter’s, auto, medical, life, disability, long-term care, etc.
  2. Determine how much coverage is appropriate for you.
  3. Sign up! Buy the policies you need to protect your family and your finances.
  4. Set a reminder to review each policy annually or whenever a major life event occurs. Ensure the coverage you have is still the best fit for you.

Resolution #3: Invest for Cash Flow

Another one of the Four Pillars of Wealth is sending your money out to work for you. How? The path to success here is in investment of your assets.

The idea is this: Most people earn money only when they spend time earning it through a job or business. But, when you invest your money, you earn dividends without needing to work. Your money effectively makes more money and is truly working for you!

Your Action Plan for 2019:

  1. Open a standard brokerage account at a trusted, discount brokerage firm like Charles Schwab, E*TRADE, Fidelity, TD Ameritrade or Vanguard.
  2. Set up a recurring bank transfer that automatically transfers money to your brokerage account within 72 hours of when you receive a paycheck. (Here’s another way to pay yourself first!)
  3. Buy income-producing assets that meet your financial objectives.
  4. Invest your dividends automatically to maximize the power of compound interest for you. Your brokerage firm likely offers a dividend reinvestment plan (DRIP) or a robo-advisor that will handle that process for you.
  5. Slash expenses. Keep — and reinvest — more of your money by reducing your portfolio expenses.

Resolution #4: Adopt a Financial Freedom attitude

Sure, there are choices you’ll make and sacrifices you’ll choose on the road to Financial Freedom. But achieving that goal — even just getting on that path — is something to celebrate!

Your Action Plan for 2019:

  1. Stop being scared to talk about money. Live your truth proudly. And don’t be afraid to share your story with others on the journey. The sense of community you’ll build, the support you’ll find and the lessons you’ll learn are invaluable.
  2. Get creative. Who says you have to pay full price for what you need or want? You can be frugal while living well.
  3. Find joy and gratitude while working toward Freedom. It’s not always easy, so try these tips for cultivating joy along your journey.
  4. Keep in mind you’re on the road less travelled. Most people are already in debt or are on the brink of it! Ignore the naysayers, and make your story different.
  5. Share your financial attitudes with your children. Our ideas about money are firmly rooted in the way we saw our parents use, talk about and stress over it. Teach your kids essential financial principles and model them in your own life.

image credit: Bigstock/Wavebreak Media Ltd

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