According to Fidelity’s most recent annual study, 31% of Americans will make financial resolutions for 2015. Of that group who wants to focus on finances when the calendar hits January 1 again, over half want to save more and the median goal is to save $200 per month.
But before you look ahead to the goals you want to accomplish in the new year, take a moment to consider how your money situation changed in 2014. The end of the year is the perfect time for reflecting on your finances so you can evaluate your progress and ensure any fresh money goals for 2015 are effective, smart, and appropriate for your situation.
Start by looking at these areas of your personal finances:
Evaluate Your Savings
Do you have more in your savings account right now than you did at the beginning of the year? If not, make increasing your savings one of your first priorities for 2015 — particularly if you don’t have enough money shored up to handle a financial emergency.
Once your emergency fund is created and full, you can turn your attention to other savings goals you want to hit.
Look at Your Retirement Account Contributions
Did you receive a raise in 2014? Were you able to lower some expenses? Did you get a bonus that you can use to max out your Roth IRA? Have you started up a side hustle that enables you to earn more money?
Make sure you up your retirement account contributions so that your savings keeps pace with your earnings (and you don’t become a victim of lifestyle inflation). Take a moment to review the changes the IRS made to contribution limits for 2015, then start working on hitting those maximums.
Not sure how to prioritize retirement savings? Your employer-sponsored retirement account should be the first thing you contribute to if you have access to one and if your employer offers a match. Invest at least enough to get your match.
And if you’re not already making use of an IRA or Roth IRA, make a plan to open up your own individual retirement account in 2015. You can speak with a financial professional to help you determine which account makes the most sense for you.
Examine Your Spending for the Year
Take time to go through your 2014 budget and examine what your projected spending was — and what your actual spending added up to. Look at any budgeting tools you use like Mint.com, or pull up bank and credit card statements.
Ask yourself where your money went, and then search for the answer. Do you feel satisfied with how you used your discretionary income? Did your spending affect how much progress you made with your savings goals? What can you do to correct this in 2015?
The end of the year is a good time to ask yourself what you can cut back on in the new year, and what changes you can make to either save more, earn more, or do both to improve your financial situation. Look for any leaks in your budget, and plan to take action to eliminate wasteful or unnecessary spending in the new year (or to cut back on excessive spending).
If examining your spending is difficult because you didn’t track it, make 2015 the year you set up a system for monitoring your expenses and organizing your finances. Create a budget and stick with it!
Plan for Major Expenses
Before thinking about all the big stuff you want to buy in 2015 — maybe a fun trip overseas, or fancy furniture for the new house you managed to save up for this year — slow down and reflect on what’s really important to you.
Look at the big expenses you took on this year. Did you buy a new house and furnish it? Buy a car or took a lavish vacation? Whatever your biggest expenses were, take time to think about them and evaluate whether or not they aligned with your values. If so, that’s great! It’s good that you understand what’s important to you, and you know how to spend your money in such a way that you feel satisfied and fulfilled over the long run.
But if you’re feeling guilty about a big expense, or feeling regret over spending so much money on a particular line item, you need to get serious about identifying what’s truly important to you before you create more big expenses in 2015.
If you know that you’ll be getting a new car or doing home repairs or renovations, start planning for that now by setting up a separate savings account for this goal. You don’t want a major expense to sneak up on you so consider how you can set aside money for big purchases that are on the horizon.
You can be more mindful with your money in this new year. It starts with taking some time to reflect on how you managed your money and progressed with your personal finances in 2014.
Once you gain some perspective on how you spend this year, you can turn to 2015 and start making a smart plan for feeling empowered and reaching your financial goals.
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