If you are the kind of person who needs a New Year’s resolution as motivation, then you are at the right place. With the combined wisdom from our many failed resolutions, you can learn from our mistakes while setting your financial New Year’s resolution and staying committed to your progress.
Create a Personal Budget
For many people, keeping track of a budget is not an easy task. However, taking control in some way over your spending and earnings is a must. A monthly budget will help you identify things that you cannot afford and things that you should add to your buying list.
To create a personal budget, you should list your fixed expenses such as bills, rent, groceries, and even savings. This gives a realistic idea about what you have left over. You can use the leftover cash to put extra down any debts you may have which will put you in a better position this time next year. If you need any idea about your spending, consider checking your previous credit card and bank statements. Many of these accounts have free spending breakdowns which can be helpful if you take the time to review them.
Clear Credit Card Debts on Time
Balance transfers can save you from extending debts. But, instantly paying off the balance before the time ends would be a wise choice. Before balance transfer, check the expiration date for interest-free payments. That way, you can save significantly on interest. When you know the date the 0% APR ends, create a plan to aggressively pay down your debts. If the plan goes well, you will be debt-free, or at least very close when the period ends.
Improve Credit Score
If your credit score is below 700, you should create a strategy to raise it this year. There are many ways for improving your credit score. Some of the effective ways are:
- Pay bills and payments on time
- Don’t open new accounts
- Reduce expenses
- Pay off debt
- Reduce unnecessary credit inquiries
Optimize Your Financial Portfolio
Every year, we set investment goals and hope to generate more revenue. But, research suggests that choosing the right time to invest is counter-productive and difficult to predict in real-time. Therefore, you should stay disciplined and create an effective monthly plan. When you follow a plan, make sure to stay on track even if things didn’t work out your way. Also, you can easily adjust the plan and maintain your financial portfolio without losing track.
Prepare for the Unexpected
When it comes to finance and investments, risks are inevitable. You should stay ready for all types of surprises such as job loss, illness, disability, lawsuits, or natural disasters. When you have a contingency plan to deal with risks, even the major ones won’t move you from a successful path. Insurance protects you from unforeseen events. However, paying for insurance is an additional expense. Here are some tips to plan your insurance expense:
- Protect large medical expenses
- Purchase life insurance
- Protect earning power during a long-term disability
- Have easy-to-get-to emergency savings
Conclusion
In the end, you should remember to take things one step at a time. When you manage everything at once, things can get out of hand. The advice mentioned above will help you create an effective Financial New Year’s Resolution. So get started right now to make real progress this year.
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