5 Financial Resolutions You Should Make as a Family
The new year has arrived and your family is ready to make financial resolutions that stick. Setting these goals as a group is a great idea, as you’re able to hold each other accountable and enjoy the journey together.
Your family isn’t alone in your desire to improve your finances in 2022. Nearly three-quarters — 71% — of people plan to set a financial resolution in the new year, according to a survey conducted by the Principal Financial Group.
Of course, setting financial resolutions is the easy part. Sticking to them can be another story, which is why Jay Zigmont, PhD, CFP®, founder of Live, Learn, Plan, a financial planning firm based in Mississippi, recommended making your family’s 2022 financial goals SMART — specific, measurable, achievable, realistic and timely.
“It isn’t enough to say I want to get out of debt,” he said. “A SMART goal would be ‘I’m going to pay off $12,000 of debt over the next year.'”
Therefore, Zigmont said you’ll have a measurable and realistic goal of paying off $1,000 of your debt per month.
“You can track your progress each month and adjust as needed,” he said. “It is the same if you change the goal to I want to save $12,000 this year.”
He said once the goal is set, you can engage your family with mini goals.
“For example, if our goal is to pay down debt, it may be helpful to put a ‘thermometer’ on the fridge each month showing progress,” he said. “Make it visual, with weekly check-ins.”
Even if the resolution isn’t something fun like saving for a vacation, he said it’s important to focus on the fact that you’re working to accomplish a SMART goal together and making it an everyday process.
When it comes to the actual financial resolutions you should set, there’s no shortage of great options to choose from. Here’s a look at five that might be the right goals for your family.
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1. Choose Experiences Over Material Things
Chances are you spent a lot of money on gifts — i.e., those in the form of physical objects — during the holiday season. These items probably made your family happy in the short term, but your kids likely won’t look back on the holiday and remember most gifts they received.
Therefore, John Rumsey, CEPA, CPWA(r), CRPC(r), managing partner at RHA Wealth, a wealth management firm in Raleigh, North Carolina, recommended setting a resolution to think of ways your family can spend meaningful time together, instead of focusing on material objects.
“This could be a time to serve your community as a family, go to the zoo or local museum, go camping, [etc.],” he said. “Research shows that children develop a greater sense of family through the experiences they share together, rather than the material things they receive.”
2. Update or Create a Family Budget
If you already have a family budget, it probably needs to be revised for 2022, and if you don’t have one, it’s time to change that.
“By doing a yearly review of your budget, you and your family can also create and/or reevaluate your general financial goals,” said Erin Ellis, accredited financial counselor at Philadelphia Federal Credit Union. “These goals could be as simple as paying your bills on time each month, or as intricate as creating a savings plan so your family can go on that dream vacation to Hawaii.”
While financial goals will vary by family, she said they should lead to the same outcome of showing why you are spending your money in a certain way. When reviewing an existing annual budget, she said you should compare what you hoped to spend with how much you actually spent.
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3. Create a Savings Plan
If your family is just putting aside money here and there — or not at all — it’s time to change that in the new year.
“By creating a savings plan for 2022, you and your family will be establishing healthy financial habits, so that once you start putting money aside, you will hopefully be on the right path to greater financial security in 2022,” Ellis said.
To get started on your savings goals, she suggested designating a dollar amount or percentage of your income each month to put into savings. She said it’s best to have the money automatically deposited into your savings account or at least put the funds out of sight.
4. Trim Your Eating Out Budget
Be honest — did your family eat out a little too much in 2021? If so, Jessica Weaver, CFP, CDFA, CFS, and author of “Confessions of a Money Queen,” recommended setting a goal to curb that habit.
“Have more meals together and cook as a family,” she said. “The money you save on not eating out can be put into a savings account or put towards something fun for everyone like a family trip.”
5. Review Subscription Memberships
It’s likely your family has at least one subscription service you don’t use enough to justify your membership. Therefore, Weaver recommended gathering everyone together to review active subscriptions to discuss which ones can be unsubscribed to.
“These forgotten monthly or yearly expenses are taken from you and you don’t even know it,” she said.
Deciding which subscriptions aren’t worth the cost will allow your family to enjoy a big and easy savings boost, she said.
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