The start of a new year is a time for reflection and setting goals. For many of us, that includes making resolutions to improve our finances. But whether you're a seasoned investor or just starting out, it can be difficult to know where to begin. That's why we've put together a list of five resolutions that can help reshape your finances in the year ahead. These steps are designed to boost your financial fitness no matter what time of year it is, so why not resolve to take them now? Whether you're looking to pay off debt, save for a big purchase, or invest for the future, these five resolutions will help you get there. So, let's dive in and see how you can start the year off on the right foot financially.

Step 1: Develop a financial plan

Committing to a saving and investing program during your working years is key to boosting your net worth and achieving important life goals. To get started, create a budget that includes your income, expenses, and savings. Track your spending for 30 days to get a clear picture of where your money is going. Determine how much you need to cover your fixed monthly expenses and how much you'd like to put away for other goals. For retirement, it's recommended to save 10-15% of pre-tax income, starting in your 20s. Once you've committed to a savings amount, consider ways to save automatically.

Calculate your personal net worth annually by making a list of your assets and subtracting your liabilities. Project the cost of big-ticket items and prepare for emergencies by creating an emergency fund. If you're retired, keep 12 months of living expenses in short-term CDs, savings accounts, or money market funds and another 2-4 years worth of spending in short-term bonds or short-term bond funds. This will allow you to invest a portion of your remaining savings for growth while reducing the chances of selling volatile investments in a down market. Review and adjust your plan as needed.

Step 2: Get a grip on your debts

Debt can be a useful tool when used responsibly, but it can quickly become a burden if not managed properly. To stay in control of your debt, it's important to keep your total debt load manageable, eliminate high-cost, non-deductible consumer debt, and match repayment terms to your time horizons.

First, it's important to keep your total debt load manageable by ensuring that the monthly costs of owning a home, such as principal, interest, taxes, and insurance, are below 28% of your pre-tax income, and your total monthly debt payments, including credit cards, auto loans, and mortgage payments, are below 36% of your pre-tax income. This will help you avoid taking on more debt than you can handle.

Next, eliminate high-cost, non-deductible consumer debt by paying off credit card debt and avoiding borrowing to buy depreciating assets such as cars. The cost of consumer debt can add up quickly if you carry a balance. Consider consolidating your debt in a low-rate home equity loan or line of credit (HELOC), set a realistic budget, and implement a schedule to pay it back.

Finally, match repayment terms to your time horizons by considering the length of time you plan to live in a home before taking on a mortgage. If you're likely to move within five to seven years, you could consider a shorter-maturity loan or an adjustable-rate mortgage (ARM), depending on current mortgage rates and options. It's important to not borrow money assuming that your home will automatically increase in value. It's important to have a disciplined payback schedule and create a plan to pay off the mortgage on your primary home before you plan to retire.

Step 3: Rebalance and diversify your investments

Investing is a tricky business, and it's hard to always get it right. The key to successful investing is to have a plan that you can stick to, even in tough market conditions. Here are a few tips to help you stay focused on your goals and improve your investment results.

First, focus on your overall investment mix. After you've committed to a savings plan, your next most important decision is how to invest your money. Have a targeted asset allocation that is a strategically proportioned mix of stocks, bonds, and cash in your portfolio. Make sure it fits your long-term goals, risk tolerance, and time frame. The longer your time horizon, the more time you'll have to potentially benefit from up or down markets.

Second, diversify across and within asset classes. Diversification can help reduce risk and can be a critical factor in helping you reach your goals. Mutual funds and exchange-traded funds (ETFs) are great ways to own a diversified basket of securities in just about any asset class.

Third, consider taxes when making investment decisions. Place relatively tax-efficient investments, like ETFs and municipal bonds, in taxable accounts, and relatively tax-inefficient investments, like mutual funds and real estate investment trusts (REITs), in tax-advantaged accounts. This will help you reduce your tax bill. Monitor and rebalance your portfolio as needed, and choose an appropriate benchmark to measure your investment performance. Remember, the long-term progress that you make toward your goals is more important than short-term portfolio performance.

Step 4: Create a plan for unforeseen circumstances

Risk is an inevitable part of life, especially when it comes to investments and finance. To protect yourself from unforeseen events that can be financially detrimental, it's important to make sure you have insurance coverage. By following some simple guidelines, you can prepare for life's unexpected moments and safeguard your financial wellbeing.

One of the most important types of insurance to consider is health insurance. Select a policy that meets your needs in terms of coverage, deductibles, co-payments, and choice of medical providers. For those in good health, a high-deductible policy may be a cost-effective way to protect against the possibility of a serious illness or unexpected health-care event.

Another important type of insurance to consider is life insurance. If you have dependents or other obligations, it's important to make sure they will be financially protected in the event of your death. Take advantage of any group term insurance policies offered by your employer, and consider additional coverage if necessary. For those without permanent life insurance needs or special circumstances, a low-cost term life policy is a good place to start.

Long-term disability insurance is another important consideration, as the odds of becoming disabled are greater than the odds of dying young. If you can't get adequate coverage through work, consider an individual policy. Property-casualty insurance is also important to protect your physical assets, as well as liability coverage for accidents or injuries that happen on your property. It's also worth considering long-term care insurance, and creating a disaster plan to protect your safety and peace of mind.

Step 5: Safeguard your wealth for the future

An estate plan is not just for the wealthy but something that everyone should consider. It ensures that your assets and minor children are protected and that your wishes are carried out. Without proper planning, taxes and attorneys' fees can eat away at assets and delay the distribution of assets just when your heirs need them most. Here are some steps to protect your estate and loved ones:

First, review your beneficiaries for retirement accounts, annuities, and life insurance policies to ensure that they transfer to the person you want quickly. Keep this information updated to make sure the proceeds of these policies and accounts are consistent with your wishes and your will.

Next, update or prepare a will. A will is not just about transferring assets but also providing for your dependents' support and care, as well as spelling out plans to repay debts. Make sure all documents are consistent and reflect your desires and work with an experienced lawyer or estate planning attorney when writing a will.

Additionally, coordinate asset titling with the rest of your estate plan. The titling of property and non-retirement accounts can affect the ultimate disposition and taxation of your assets. Talk with an estate attorney or lawyer about debts and the titling of assets that don't have a beneficiary designation. Also, have durable powers of attorney for healthcare in place, and consider a revocable living trust for larger and complex estates. It's also important to keep important estate documents in a safe and accessible place for a trusted and competent family member or close friend.

Creating a plan to improve your financial health can seem overwhelming, but it's important to remember that you don't have to do everything at once. It's important to take small steps and think of financial resolutions as a checklist. By focusing on one task at a time, you can make real progress on your financial journey this year. Whether it's paying off debt, building an emergency fund, or creating a budget, each step you take will bring you closer to your financial goals. Remember to be patient with yourself and celebrate small successes along the way.