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Five ways to actually stick to your financial New Year's resolutions

Kristine Davenport of The Trust Company of Tennessee shares five financial resolutions that could help you end 2021 better than you started it

KNOXVILLE, Tenn. — A new year can mean a fresh start, but if one of your resolutions is to finally be better with your money, it can be a little overwhelming. 

 "Just like with fitness goals, you can say, 'I want to lose weight' or you can be more specific about what you want to accomplish and when. That same breakdown with financial goals is the best way to do that," said Kristine Davenport, a relationship manager at The Trust Company of Tennessee. 

Davenport shares five financial resolutions that you could make to end 2021 better than you started it. 

1. Make a working budget

 "I think the reason that budgets can be so overwhelming is the traditional view of what a budget is, like an Excel spreadsheet with every single spending category broken down and you have to stay within those parameters for every category every month, and that's really not realistic," Davenport said.

There are numerous apps you can use to help keep track of how much income you're bringing in each month and how many bills you have to pay. 

"Then, look at what you need for saving or paying off debt to reach those goals that we just talked about, and then whatever you have left over is your spending money," Davenport said. 

2. Up the amount on your 401K

"A lot of companies will match a certain amount that you put in, so you're essentially leaving free money on the table if you're not contributing to your 401k. Then, just increase it by 1% per year. You're probably not going to miss that if you make that increase before you review your budget. You won't even know that the money was there to begin with," Davenport said.

If you have questions about your 401K, talk to your human resources department. 

3. Make one extra principal payment on your mortgage this year

Davenport said that if you make an extra payment each year, you could pay off your home six years early. 

"A lot of mortgage companies let you actually split your mortgage payment in half and make that payment every other week instead of once a month, and by making it every other week you actually make 26 payments in a year and you automatically get that extra payment in a year," Davenport said, adding that she's a fan of automatic payments, so you don't have to remember to pay a bill every time. 

4. Update your beneficiary forms

This one's an easy goal. Reflect back on the year and see if there were any major changes like having a baby, getting married, or getting divorced that could mean it's time to update the beneficiary forms on your 401K or IRA accounts. 

"If something were to happen to you, and you hadn't updated that beneficiary form to reflect any life changes, that money might not go where you want it to go when you pass away," Davenport said. 

5. Save for something fun you can use this year

While many goals are often long-term ones where it could take years to see the results, Davenport suggests rewarding yourself with a short-term goal that you can achieve each year, like saving for a vacation. 

"Having a shorter-term goal like, 'Let's go on vacation at the end of the year,' you're rewarding yourself for putting those good behaviors in place," Davenport said.