While some people think it’s better to avoid making New Year’s Resolutions, it’s important to get specific as possible if you do decide to do make them. If you’re they type where New Year’s resolutions help motivate you to achieve those goals, here are some that you should consider relating to your finances:
It’s easy to tell yourself that you’re going to save more money, but do you ever follow through with those promises? You might start saving for a month before deciding that you’d rather spend that money on other “necessities”. However, saving can be fairly easy. Even someone living on a strict budget can find ways to cut costs and save a little money. You can start small, such as shoving $5 or $10 away at the end of each month. Some people like to take all the small bills out of their wallet at the end of the week. If you don’t carry cash, have part of your paycheck automatically deposited to a savings account.
Spending less money is also easier said than done. But a lot of us have the unfortunate tendency of overspending on certain products. Sometimes this occurs because there’s a minimum balance requirement, which often happens at online retailers and tricks people into spending more money. You’ll need to start taking stock of how much money you’re spending and where you can cut costs. For instance, instead of buying that $20 bottle of special shampoo, you might want to try the $5 brand instead.
Pay Down Debt
Paying down debt is difficult, especially if you’ve accumulated so much debt that it seems as if you’ll never pay it off in your lifetime. However, you should make a resolution to attempt to get a handle on your debt. Once you know how much you owe and each payment plan, you can start to create your own short and long term goals and work toward paying it down. This might be setting aside extra money each week for a monthly payment or taking on extra jobs to make large payments on the interest or principal balances.
Have an Emergency Fund
Emergency funds are important to have in case anything unexpected happens such as a medical emergency, a natural disaster, or the loss of a job. While creating an emergency fund is difficult if you’re living paycheck to paycheck, you can always try and put aside a little extra money. When you receive your tax returns, you can set aside a portion for your emergency fund, for instance. In an ideal world, your emergency fund should be able to cover your expenses for six months. If that seems unlikely for your financial budget, you should plan to have one that can at least cover your expenses for one month.
Create a Budget
Sometimes the best way to keep control of your finances is to create a budget. Mark down all your expenses so you know how much you need for the month. This will help you to see how much you need to save and how much leftover income you have. Creating a budget also gives you a firm number to work with and makes you more aware of how much money you’re spending each month.
Track Your Finances
When was the last time you looked at a bank statement? How often do you swipe your debit or credit card without thinking twice? You should make a habit of tracking your financial statements for a few reasons. For one, it might help you address unneeded spending. You might not realize how often you order takeout until you see it listed on your bank statement. Additionally, looking at your bank statements can help you address any fraud claims. There are plenty of people who never really know how much money they have in their bank account and would never know if someone charged something to their account.
Checking Your Credit
You should make a habit of checking your credit at least once a year. Not only is this a good way to prevent identity theft, but it will help keep you up to date on your credit history and score. A bad credit history can create problems down the road, so if you have plans of buying a home or applying for insurance, you might be able to improve your credit. Free credit reports are available at Annual Credit Report.
Start a Retirement Fund
Many people don’t take advantage of starting a retirement fund when they first enter the workforce. Sometimes it’s because they believe they don’t have to worry about a retirement fund until later in life and sometimes it’s because they think they can’t part with the money. However, one of your primary financial goals should be creating a retirement fund. What would happen if you never saved money for retirement? You want to be able to have all your expenses covered in your old age, right? Start putting money into a 401(k) account as soon as you can.
Be Aware of Fees
How many times have you swiped a card somewhere even when you knew you’d encounter a $3 fee? Or maybe you were feeling lazy and didn’t want to go to the grocery store, so you decided to pay the $10 fee for grocery delivery. Maybe you overdrew your bank account and now have to pay a $25 fee. Regardless of the reason, you should be more aware of associated costs and fees with your transactions as this could help you avoid them and save money in the future.
Have you ever considered going on a cash only budget? Getting rid of your debit and credit cards might help you to save more and spend less. When you only have cash, you’re limited to only spending a certain amount.
What are some of the financial resolutions you’re planning to make this year?
(Photo courtesy of simplyla)