Tough times don’t have to derail financial goals

I gave up New Year’s resolutions decades ago, but I have spent the intervening years finding ways to replace them.

My issue with resolutions is that the typical pledge is abandoned the moment it is broken and forgotten completely come February.

The desire to reach milestones or goals, to achieve something difficult or simply to complete some self-improvement is an ongoing process, unlikely to be completed without a few setbacks.

Over the years, therefore, I’ve tried — and recommended — various forms of goal setting and planning. For years, I wrote a list of goals that I sent myself on New Year’s Eve and tacked unopened on my bulletin board, checking in at the end of the year; a few times, I discontinued a list and focused on one big thing, after the pandemic I was looking at “Three Year’s resolutions,” knowing that it would take a while before life — and the goal-setting around it — would return to normal.

I never truly developed a favorite system, but I always favored systems that weren’t derailed by a momentary setback or loss of willpower. The object is improvement; the objective doesn’t have to be instantaneous.

Fidelity Investments recently released its 14^th annual study on financial resolutions for the new year, and current economic conditions have sapped some Americans’ optimism, persuading more people to make practical resolutions with an eye on short-term goals, like increased emergency savings or reduced debt over long-term benchmarks, like higher retirement savings.

A lousy stock market, high inflation and rising interest rates have taken a bit of the joy and hope out of the resolution/goal-setting process — most investors did all the right things by being focused on the long-term this year, but still saw their portfolios shrink — but they haven’t reduced the importance of tackling some financial tasks.

 If anything, they have made some of the financial basics more important.

Whether you resolve, plan or challenge yourself to financial accomplishment in the year ahead, here are some financial issues to have on your list. Even if you don’t hit these targets, accomplishing these tasks will at least help you make some progress, even if 2023 turns out to be rougher than ’22.

Reduce your debts.

While credit cards may represent financial freedom — the ability to buy the stuff you want — debt to most people equates with financial stress and struggle.

 The average credit-card interest rate is now a rounding error away from standing at 20 percent, the highest level on record at CreditCards.com; it’s up sharply — more than 2.5 percentage points — from where it stood 24 months ago.

For years, investors and savers paid so little on their borrowings that using debt as a tool made sense because it could goose returns. That fell apart this year as rates rose and market gains fell.

   The return achieved by paying off debt — by not owing interest — is real, so “investing in debt reduction” may be the best financial call most people can make in 2023.

Rebalance your investment portfolio.

Normally, rebalancing is about pruning back your winners and reinvesting the proceeds into your laggards to get back to your intended asset allocation.

This year, it’s more about making sure that losses haven’t thrown you for a loop.

When times are more volatile and less rewarding (hello 2022, and likely ’23), it favors diversification; rebalancing to get back to your planned allocations can ease the nervousness that comes with market whipsaws.

Revisit your service and subscription costs.

A few years back, I decided to see if I could save money on my insurance coverages, and saved thousands of dollars just by making the change. I recently investigated new cellphone plans; I expect to have similar savings by making a change in 2023.

Examine all of your recurring bills. Don’t be shy about calling everyone from your energy suppliers to the internet companies, cable companies, insurers and more.

Even if you signed up for a great deal, it may not be so terrific anymore. Shop around, revisit the plans.

Upgrade what you can, get rid of what you no longer need and use whatever you are paying for..

Yes, it is aggravating and not fun, but the dollars you save may be well worth the effort.

Update your health care directives, wills and estate planning.

The pandemic left us all a little fatigued by health concerns, but the lingering lesson from it should be that our health can change on a moment’s notice, based on little more than who we bump into at family celebrations, parties, trips to the grocery store and more.

Completing tough financial tasks is a real accomplishment; you will feel better by minimizing problems that might only arise when your loved ones are going through tough times and you’re not able to help them.

Make sure your papers are current, up-to-date and appropriate for your current and future situation; this is another area where the passage of the New Year reminds us that something that was great when agreed to a decade or more ago may not be so wonderful now.

Reduce financial stress.

OK, so this is too vague to be an actual goal or resolution, but your experience – and the stresses you’re facing – will guide you to the specifics.

Financial pressures intensified this year; bad markets and a tough economy do that, even for people who are secure.

Identify what stresses you out; if you need to save more, reduce bills, eliminate debts, replenish emergency monies, improve your credit score, insure your health or your valuables – or any combination thereof — set targets that not only make progress for the year ahead, but also position you better for the next three to five years.

Take care of yourself first.    

The better your health, state of mind and finances, the healthier you will be for yourself and your family. Being good to yourself can be defined in a lot of ways, and may seem selfish, but it typically has the spillover effect of making you better to those around you. That makes it a win for everyone