At the start of a new year, it’s natural to reassess goals and priorities. Many of us make resolutions to better ourselves. It is in this spirit that I offer you some financial priorities for the new year. Please understand that these suggestions are general in nature, and your specific financial situation might benefit from a different approach. However, these are good financial rules of thumb. If they do not apply to you, perhaps your relatives or friends could benefit from this advice.
No debt, except a low-interest mortgage loan
Credit card debt, student loans, and car loans hurt financial flexibility. If you pay 7% on a student loan, you must earn at least 7% after taxes to break even. Credit card debt is even worse, often topping 19%! Pay off this debt in the new year. Start with the higher-rate and lower-balance loans.
Start investing early
Financial magazines are littered with articles describing the benefits of compound interest. There is another benefit, however. By starting early, you gain valuable investment experience when you are young and investing smaller amounts. Learning that a diversified portfolio goes up and down can be invaluable as you approach retirement. Fear can overpower reason. Your experience can be a good defense against selling low and buying high.
Stay away from gimmicks
Many young people want to make money by gambling. “A July study led by Scott Baker, an associate professor of finance at Northwestern University, found that households increased their bets by $1,100 per year while simultaneously decreasing their investments by 14% when states legalized sports betting.” The problem is, they are losing. “Researchers at the University of California, San Diego found that of the more than 700,000 gamblers they surveyed, 96% lost money to online betting. Just 4% turned a profit.”
Spend wisely
In my 35 years of experience as a financial advisor, I can assure you that the greatest correlation with long-term financial independence is frugality. Consider making your own coffee, eating at home, canceling monthly subscriptions to cable or streaming services, using coupons, and wearing clothes that may be out of style. Of course, you need to balance frugality with enjoyment. Understand, though, that there is a trade-off. Canceling a daily Starbucks run can save you $140 a month!
At Private Wealth Solutions, we don’t spend much time with our clients reviewing these basics. In our experience, they already follow these rules of thumb, and many are already retired and financially independent. If you are not, consider these suggestions as you begin 2026. They may work for you.
Doug Lagerstrom
- https://money.com/online-sports-betting-stock-market/