Setting financial New Year’s resolutions is a sore point for almost everyone. We all think about spending less and saving more in the coming year but it generally remains a vague resolution. We think about it and within a few days into the New Year we inevitably forget about it and go back to our old ways. The key to setting financial New Year’s resolutions you can keep is to first write those resolutions down. Then take the time to formulate a practical and realistic financial plan that’s tailored to your specific circumstances.

Experts recommend resetting financial resolutions and goals at the start of every year. This is because our circumstances change every year. What was relevant the previous year may no longer be relevant the next year.

So what financial New Year’s resolutions are you setting and how do you intend to keep them? If you’ve never done this before, we’ve put together a few ideas to help you get started. All of these resolutions will not apply to everyone. Pick and choose the resolutions that are relevant to you and use them as a springboard to set your own for 2022.

#1 – Pay All Debts on Time

When you take any type of loan, whether it’s a student, home, car or personal loan, you have to pay it back with interest. And interest rates on loans can be shockingly high. These high interest rates can make a huge dent in your savings.

What reduces your savings even more is missing a payment deadline. Regardless of the reason the payment is late, you’ll pay a late fee and additional interest on the outstanding amounts. This will increase your total debt the following month, making it even more difficult to pay back. Consecutive late payments can push you further into debt, making it impossible to get out of.

Late payments will also hurt your credit score, resulting in other, more serious consequences.

How to make sure your loan payments are made on time in 2022– The most effective way to ensure you don’t miss a due date is to set up automatic payments through your bank. With auto-pay, the money gets transferred on a set date to the lender on the specified date. No late payments means no unnecessary late fees and interest, which ultimately adds to your savings. The additional rate discount lenders offer for auto pay will rack up those savings.

If refinancing your student loans is a part of your 2022 resolution, check out our top picks student loan refinancing.

#2 – Save More Money

“˜Save more money’ typically tops the list of financial resolutions every year. No surprise there. Almost everyone looks back at their expenses in the year gone by and resolves to save more money in the coming year. It’s a good resolution to set but you need to formulate a definite plan to keep this resolution through the year. Without a plan, you’ll inevitably go back to your old habits.

How to save more money in the New Year – Go through your 2021 budget and see where you can cut back on unnecessary expenses. Renting a smaller place, resolving to cook at home more and eat out lessx, and canceling unnecessary subscriptions are a good start. Setting up auto pay for debt payments will boost those savings. Increasing your 401(k) contributions is another way to save more money.

#3 – Improve Your Credit Score

A strong credit score can open many doors for you. Not only will it make it easier for you to get approved for a loan but you’ll also qualify for a lower interest rate on the loan. The higher your score the less you’ll pay in interest, which is a compelling enough reason to work towards improving your credit. Even a small rate reduction can add up to significant savings over the loan term.

With a good score, you’ll also get approved more easily for a credit card of your choice. A good credit score can also positively impact your employment opportunities and ability to rent a home of your choice.

How to improve your credit score in 2022 – Making all credit card and loan payments on time is the fastest way to improve your credit score. If you want to boost your credit score in 2022, resolve to make all payments on time, every time. You can do this by setting up auto payments or by setting up digital or physical due date reminders. Limiting the amount of credit you use and the number of new accounts you open in 2022 will add few more points to your credit score boosting the total.

#4 – Review Your Credit Report

Every time you make a payment towards a loan or credit card, it gets reflected in your credit report. Credit bureaus use the information in your credit report to calculate your credit score. Every on-time payment adds a few points to your score. Every late payment deducts a few points from your score.

Sometimes, inaccurate entries get recorded on the credit report. A payment that was made on time may get recorded as a late payment. Or it may not get recorded at all. These incorrect entries hurt your credit score, affecting your ability to get a low cost loan in the future.

The only way to resolve credit report inaccuracies and make sure your credit score is calculated correctly is by reviewing your credit report every year. If you do come across any inaccuracies, you have a right to file a dispute with the relevant credit bureau and ask them to resolve it and recalculate your credit score.

How to review your credit report without paying a cent – You are entitled to receive one credit report every year from each of the credit bureaus. To get a free copy of your credit report, you need to submit the application form available from AnnualCreditReport.com. Every credit bureau uses their own formula for calculating credit scores. It’s always a good idea to order a credit report from the three major bureaus – Experian, Equifax, and TransUnion – to make sure they are all correct.

#5 – Refinance Your Student Loans and Mortgage

Interest rates have been at historic lows through most of 2021. Although rates have gone up towards the end of the year, the increase has been marginal. As we enter 2022, interest rates are still very low. If you have a mortgage or private student loans, you should consider refinancing in 2022 to lock in low interest rates. This will lower your monthly payments and also reduce the total amount of interest that accrues.

Whether or not refinancing federal student loans is right for you will depend on your financial circumstances. Right now, federal student loans are in forbearance. This deadline has been extended several times. As it stands now, the payment pause has been extended through January 2022 and it’s highly unlikely that it will be extended any more.  This means you’ll need to start making payments starting February 2022.

So should you refinance your federal student loans? You should if you want to lock in the low interest rates and save money on your debts. You shouldn’t if you want to avail of the income-based repayment plans or if you’re pursuing student loan forgiveness.

How to refinance loans – Refinancing loans is pretty straightforward. The most time-consuming part will be looking for the right lender. One way to zero in on the best lender for you without spending hours searching on the internet is to go to a site such as Refi.me. On this site, you’ll be able to compare terms and personalized interest rates offered by multiple reputed lenders within minutes. You can even apply to your preferred lender directly from the site. Refi.me is a trustworthy site with rock-solid security measures in place. Refinancing your loans through this site saves you time and money without compromising your personal information.

#6 – Eliminate Credit Card Debt by Paying Off Credit Card Balances Fully Every Month

Paying off your credit card balances in full every month is more important than you may realize. This should definitely make it to your list of financial New Year’s resolutions for 2022.

Credit cards offer the ultimate in convenience. They make it easy to buy anything you want even if you don’t have the cash available. And if you can’t afford to pay the balance by the due date, you can get away by paying the minimum amount. While this sounds like a tempting proposition, you’ll soon find yourself deeply in credit card debt.

When you pay only the minimum amount, the only thing you save on is the late payment fee. However, you still have to pay interest on the outstanding amount. And credit card balances carry shockingly high interest rates. The outstanding amount attracts interest every day that it doesn’t get paid. This increases next month’s balance, making it even more difficult to pay off.

How to reduce credit card debt in the New Year – The best way to reduce or even totally eliminate credit card debt is by not overspending with your card. For some, this is easier said than done. If you find it difficult to cut back on spending, consider getting a prepaid card. With a prepaid card, you fill money onto the card before you can use it. You can then spend only as much money as you have on the card. This prevents you from overspending and is the best way to eliminate credit card debt completely in 2022.

#7 – Build an Emergency Fund

It’s never too early to start building an emergency fund. You never know when an emergency may arise and when it does, you’ll be glad you have an emergency fund to cover those expenses. An emergency fund is a crucial financial tool that can help you deal with those unexpected expenses. If you don’t have an emergency fund yet, resolve to do this in 2022.

How to build an emergency fund – Start by evaluating your income and expenses and look for areas where you can save. Put your savings in a separate, dedicated high-yield savings account. Keep depositing your savings into this dedicated account and let the money accumulate interest. Don’t use this money for any other purpose other than an emergency such as urgent medical treatment or car repairs. Financial experts recommend building an emergency fund of at least 3 to 6 months of living expenses. Contributing more than that is even better.

#8 – Look for Ways to Increase Your Income

Most financial plans and resolutions focus on cutting back expenses to save more. But sometimes it’s less about saving and more about boosting your income. There are some expenses that you just cannot cut back on. If you’ve maxed your savings, the only way to free up cash is to look for ways to increase your revenue streams. Fortunately, there are many ways you can do this.

How to boost your income in New Year – Freelancing is the best way to increase your earnings. Look for freelancing gigs that play to your skills, experience, and areas of expertise. Whether you’re a skilled writer, graphic designer or app developer, you can find plenty of gigs that pay well for these services. The big advantage with freelancing is that you can take up as much or as little work as you want every month. Aside from skilled freelancing work, you can also increase your monthly income doing non-skilled jobs such dog walking, lawn mowing, or babysitting. You can find endless side-hustle opportunities if you’re truly committed to increasing your income in 2022.

One Tip to Keep in Mind When Setting Financial New Year’s Resolutions

When setting financial New Year’s resolutions don’t focus only on the big wins and completely ignore the small wins. Remember, the small wins add up. Small savings can add up to a substantial amount over the period of a year. Similarly, small extravagances can add up to massive unnecessary spending over the year.

As part of your financial resolutions for 2022, ditch the “all or nothing” mindset and stay committed instead to taking small but consistent steps towards achieving your financial goals.