5 Quick Steps to Improve Your Finances in 2018
Here are a few New Year's resolutions to shoot for with healthy payoffs.


Losing weight and improving one’s finances are almost always at the top of most people’s lists of New Year’s resolutions. It makes sense to look out for your physical and financial health so you can enjoy life to the fullest. Following through on your resolutions is usually the tough part — it takes changes in certain behaviors, discipline and time to experience and maintain the results. This is as true for financial planning as it is for losing weight.
If improving your finances is one of your New Year’s resolutions, here are five steps you can take starting Jan. 1:
Immediately Pay Down Holiday Bills and Credit Cards.
Many people splurge on holiday gifts, parties and travel in December, but the bills will come due in January. Resolve to pay down those debts quickly to avoid large interest charges on your credit cards.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Set a goal to pay off the total amount on one card within a few months, if not sooner. If you or your spouse expects a bonus check from your employer in early 2018, use at least some amount from this check to pay down debt. Finally, start by paying off the credit card with the smallest balance. Even though this card may not have the highest interest rate, paying off the total amount on one card will provide the motivation to keep paying off the others.
Build an Emergency Fund.
Everyone should have at least three to six months of their living expenses set aside in a cash savings account. This number should be higher when you are retired, such as one to three years of spending needs, and should be coordinated with your overall investment mix. In order to accomplish this goal when you are working, set up an automatic draft from your paycheck into a separate savings account. This account can be used for emergency car and household expenses and will help avoid piling up new credit card debt on top of the existing debt from the holidays.
I personally use an online bank for my savings account. Online financial institutions often pay higher interest rates on cash and CDs than traditional brick-and-mortar institutions. Here’s another tip: Consider using different banks for your savings account and your checking account. It’s a little less tempting to access your savings account when the spending impulse strikes if it’s not at the same place as your checking account.
Increase 401(k) Retirement Plan Contributions.
The amount each person can contribute to a 401(k) retirement plan is increasing by $500 in 2018, to $18,500 for individuals under age 50 and $24,500 for people 50 and older. Everyone who is working should resolve to save an extra $500 for retirement this coming year.
If you are getting a raise going into 2018, increase your 401(k) savings rate by the amount of your raise if you are not funding your 401(k) to the maximum already. This is a discipline I have followed since receiving my first paycheck at age 22 — I kept increasing my 401(k) savings rate each year until I was able to reach the savings limit, and I’ve never looked back.
Let’s say you are getting a $5,000 raise in 2018. If you save this amount annually over the next 10 years, and at an average annual investment return of 5%, your retirement savings can be over $60,000 higher. That could buy you a shiny new car in retirement.
Rebalance Existing 401(k) and Retirement Account Investments.
In addition to adding to your retirement account, review your existing investments in January to ensure a reasonable mix of stocks and bonds. With equity markets at all-time highs, the percentage of your funds in stocks may now be higher than you planned. Over time, an investment account that is overweight in stocks can grow substantially, but during a recession or stock market downturn your balance can suffer, too.
If retirement is right around the corner for you, it’s especially important to consider the amount of stocks or stock mutual funds you are comfortable owning. Finally, while you are logged into your retirement accounts, check to see that your beneficiary designations are correct and up to date.
Review Home and Car Insurance Policies.
Over the last five years, the consumer price index for auto insurance has gone up over 20%, compared with the overall CPI of 4.5% during this period. Many insurance companies raise auto and home insurance premiums each year, and even small increases can add up over time.
I recommend sitting down with your insurance agent every three years to make certain you are taking advantage of any discounts available, and that you have proper coverage, given changing asset values. Managing risks and protecting your assets is an important part of financial planning. Also, review the deductible amount on each of your auto and home policies. This move can significantly lower premiums now. If you have an adequate emergency fund built up, you should be able to cover a higher deductible in the event of a loss.
It’s time to make New Year’s resolutions stick. Look out for your personal and financial well being this coming year. You’ll find that making small progress will empower you, and motivate you to reach your goals. And the following year you may just resolve to keep your 2018 resolutions going!
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College” and “Girl Talk, Money Talk II, Financially Fit and Fabulous in Your 40s and 50s". She is the Practice Area Leader for corporate professionals and executives at wealth management firm CI Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner, cyclist and supporter of charitable causes focused on homeless children and their families.
-
Dow Hits New Intraday High on Fed Day: Stock Market Today
Not even the most important stock in the world could keep the oldest equity index down on a significant day for markets.
-
Savings Goal Calculator
Tools Want to know how much you need to save each month to reach your financial goals? Our calculator helps you build a realistic savings plan.
-
Gray Divorce Can Throw Your Retirement a Curveball: What to Know
If you're entering retirement and going through a divorce at the same time, you've got some work to do to shore up your long-term financial security.
-
I'm a Real Estate Investing Expert: Optional 721 UPREIT DSTs Can Be the Best of Both Worlds
Before investing in any 721 UPREIT exchange, look for one that offers a straightforward, investor-friendly exit.
-
How an Expired Passport Thwarted Blackmail (and What Other Important Documents You Should Keep)
An optometrist produced his expired passport to foil a blackmail attempt by the daughter of a former employee. After proving he was out of the country on the date of a forged diary entry, he took it a step further.
-
Optimize, Grow, Retain: The Power of Annual Client Reviews
Financial advisers can use annual reviews to help enhance client outcomes, strengthen relationships and build their practice.
-
I'm a Real Estate Investing Pro: This Is What Investors Should Know About Truck Stop Investments
Truck stops might seem like good investments, but they can actually be a risky gamble due to unstable fuel prices, unreliable operators and coming changes in transportation. Instead, consider safer options like industrial or residential properties.
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary Forms
Standard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams Now
Beyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on Retirement
While some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.