6 Financial Resolutions You Will Regret — Here’s Why
Written by
Cynthia Measom
Edited by
Carly Brashears
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As a new year comes into view, financial resolutions are always a popular pick fueled by the best of intentions. However, sometimes instead of experiencing triumph at your achievements as the year plays out, you’re left with regret at making the resolution in the first place.
Why is that? Some goals are far too vague or general, while others may not be ambitious enough. Here are six flawed financial resolutions you will probably regret.
Save Less Than $1,000
When asked, “How much do you realistically want to save in the next year?,” 15% of respondents to GOBankingRates’ Year-in-Review Survey for 2023 said “less than $1,000.” While that may be a realistic goal, you’ll likely regret it.
“Saving less than $1,000 might not provide a sufficient financial cushion for unexpected expenses or emergencies, leading to potential financial stress,” said Taylor Kovar, CFP, CEO and founder of Kovar Wealth Management. “Aim to save a more substantial amount, ideally building an emergency fund that covers three to six months’ of living expenses. Start small, if necessary, and gradually increase your savings rate as your financial situation allows.
Invest In Stocks (Instead of Putting Money Into a 401(k) or IRA)
According to the GOBankingRates’ survey, around 4% of respondents said their top financial goal for 2024 is to invest more in stocks. But Kovar says this should not take priority over contributions to your retirement accounts.
“While investing in stocks can offer higher returns, it also comes with higher risk,” Kovar said. “Neglecting tax-advantaged retirement accounts like 401(k)s or IRAs means missing out on potential employer matches, tax deductions and tax-deferred growth. Balance your investment strategy. Contribute enough to your 401(k) to get any employer match (which is essentially free money) and take advantage of the tax benefits of IRAs. You can still allocate a portion of your portfolio to individual stocks.”
Have a Minimal Emergency Fund Going Into 2024
While a little over 10% of respondents said they have an emergency fund that will cover a half-year of expenses, 13% indicated that their emergency fund will only cover a few weeks of expenses.
“A minimal emergency fund may not be enough to cover unexpected events like job loss, medical emergencies or major repairs, potentially leading to debt,” said Kovar. “Work towards building an emergency fund that covers at least three to six months’ of expenses. This provides a great safety net and financial peace of mind.”
Save More Money
Approximately 25% survey respondents said their top financial goal was to “save more money.” In fairness, they only had so many survey options to choose from, so some may have had more specific savings goals. But the general “save more money” resolution is one that often falls flat almost as quickly as that pledge to “get in shape.”
“While saving more money is a positive goal,” Kovar said, “setting it without a specific plan or amount can lead to vague and unmet resolutions. Set a clear, achievable savings goal. Determine a specific amount or percentage of your income to save each month, and consider automating your savings to ensure consistency.”
Make More Money
Approximately 18% of respondents chose “Make more money” as their top financial goal for 2024.
“Similar to saving more, the goal to make more money is too vague and lacks a concrete plan, which can lead to disappointment or lack of direction,” said Kovar. “Set specific, actionable steps to increase your income. This could include pursuing a promotion, acquiring new skills for a higher-paying job, starting a side hustle or investing in income-generating assets.”
Get Out of Debt
Finally, approximately 23% of respondents chose, “Get out of debt” as their top financial goal for the coming year. Here’s another case where you’ll need to concoct a plan.
“While paying off debt is commendable, focusing solely on debt repayment without saving or investing for the future can leave you financially vulnerable in other areas,” Kovar said. “Adopt a balanced approach. Allocate funds for both debt repayment and savings/investments. Prioritize high-interest debts but also ensure you’re saving, especially in an emergency fund and for retirement.”
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