Setting a New Year's resolution is a tradition commonly discussed but uncommonly acted upon. Fewer than half of Americans set resolutions, and those who do often cast them away before Valentine's Day.

This year, take a different approach by creating a New Year's financial resolution and setting yourself up for success. Here are five great financial resolutions to make this year, and tips on achieving them:

1. Review last year's budget

It's hard to improve if you don't know what your starting point is or how close you were to your goals. Before you update your budget for 2019, review how you did in 2018. Here are some considerations you might come across in your personal budget review:

Overspending

It's easy to spend more than you planned. If you find that you spent more than you anticipated in one or more areas of your budget, try to figure out why it happened. It's possible that you went off-budget because you didn't plan or track your activity. While reflecting on your budget, you should also look for opportunities to cut back on your overall expenses.

"One piece of advice I could give anyone would be to print out a recent copy of your bank or credit card statement. Take a highlighter and look at each transaction. Ask yourself 'Did I need to make this purchase?' This should be a quick yes or no answer. No 'maybes'. You’ll be amazed to see how much you spend on little things every day. This will help create an awareness as to how much you are spending and to be cognizant of where your money is going each month."

-Coleman Webb, Associate Financial Advisor, Raymond James Financial Services, Inc., OnPoint Wealth Management & Investment Services

Underspending

On the other hand, you may find that you didn't spend as much as you thought you would in another area of your life. Though this is a more positive discovery than overspending, it's equally important to find out what contributed to the miscalculation. Slimming down your spending goals in one area could mean you could increase the amount you dedicate to another area—or even budget for something else entirely. It’s also possible that you may have just had an outlier of a year that led to the savings, such as fewer trips away from home or less car maintenance than usual. Looking closely at these expenses can help you determine the best approach.

Unexpected expenses

Some expenses aren't easy to anticipate, but once you identify them, it's important to add them into your budget. Whether it was a surprise doctor's visit or an annual car registration fee that you forgot to include, be sure you plan for these expenses in the future. Having an emergency savings account will help you cover unpredictable costs like these. Even if the emergencies are not the same, you may find that there’s a certain amount of unexpected expenses that crop up year after year. Knowing this can help inform you about how much to stow away in your emergency savings account from one year to the next.

Income miscalculations

Expenses are only half of your budget calculation. You also need to be accurate in your income in order to have a well-structured budget. If you miscalculated your income—whether you got a raise you didn't account for or you brought in supplementary income from a second job - update your budget to reflect it.

Keep in mind, if you made more money than you expected, it doesn't mean you have to spend more money. If you feel comfortable with your budget, direct that raise straight into a savings account where it can grow into a nice nest egg for the future.

2. Don’t have a budget? Start one now

If you didn't have a budget last year, there's no time like the present to start. A budget helps you keep a close eye on your income, spending and saving so you're well-prepared for future expenses.

The first step in creating your budget is to determine your income. If you are a single person with one job that pays regularly, this may be a fairly easy task. If you'll be combining finances with a partner or you have multiple jobs, be sure to include all sources of household income to get an accurate starting point.

The next step is to determine your expenses. The basics may be easy to identify, like your housing payment, utilities, cell phone and groceries. Don't forget about other purchases you'll make, too, like gifts for family, vet visits or entertainment. Assign a value to each category so you can analyze how well you're sticking to your budget throughout the year.

Identify your long-term and immediate goals, including the costs associated with them. For example, if you want to buy a house later this year, how much will you need for the down payment? How much can you save each month toward this goal?

Most people have a monthly budget, but annual and bi-weekly budgets can also be helpful. Here are some of the pros and cons of each budgeting structure; choose the one that works best for you.

3. Open a savings account specifically for a long-term goal

If you're saving for a long-term goal or large purchase, it's important to keep track of your progress. This is easy when you have a dedicated savings account for this goal. If you only have one catch-all savings account (or don't have a savings account at all), resolve to organize your savings with multiple accounts this year. Not only will this give you a clear idea of how close you are to your objectives, but it'll also create a buffer to prevent overspending on one purchase only to lose ground on another goal.

4. Check up on your retirement account

The New Year means you're one year closer to retirement. As this life stage approaches, make sure you're financially prepared. Here are some signs your retirement savings could use some work this year:

You don't have a retirement account.

If you have access to an employer-sponsored account like a 401(k), take advantage of this. If you don't, look into alternative options like an IRA.

You don't know how much you should have saved by now.

Start thinking about retirement savings goals by using OnPoint's retirement planning calculator.

You're below your retirement savings goals.

It may be time to revise your budget to support your savings goals or schedule an appointment with a financial advisor to help get you on track.

5. Review your asset allocation

If you have investment accounts, schedule a time to check in with your financial advisor. Review your portfolio performance and analyze your asset allocation to make sure it's still in line with your life goals. It may be time to make a change—or not—in either case, a conversation with your financial advisor can give you a good look into your investments. 

If you're not investing yet, 2019 might be the year to get started. Check out our blog post to see if you're ready to invest.

Disclosure

Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC and are not insured by credit union insurance, the NCUA or any other government agency, are not deposits or obligations of the credit union, are not guaranteed by the credit union, and are subject to risks, including the possible loss of principal. OnPoint Community Credit Union and OnPoint Wealth Management & Investment Services® are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Raymond James privacy policy. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

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Any opinions are those of the author and not necessarily of RJFS or Raymond James.