Financial Resolutions You Can Actually Keep
It’s easy to make big financial goals and resolutions for the new year, like saving for a house, paying down debt, or switching to a higher-paying job. Unfortunately, few of us actually stay committed to those goals. If you want to make meaningful changes to your finances this year, the most important thing to realize is that you need to take small but consistent steps towards those goals. Here are some financial resolutions you can actually keep in 2021.
Start with a Budget
The most common resolution is to set up a budget and stick to it. That can definitely be a great way to gain control of your spending, but it doesn’t have to be a daunting process. Start with a simple spreadsheet that records your income and necessary expenses like rent and utilities. Then add in your discretionary spending, such as what you spend on food, entertainment, and clothing. Once you have a grasp of your expenses, you can figure out how much you have left over each month to put in savings or sock away in your emergency fund.
Find Ways to Cut Expenses
Once you’ve taken an honest look at your expenses, it’s time to find ways to reduce them. It’s amazing how many small expenses can add up over a period of time. Make an effort to cut back whenever possible. If you’re already living within your means, you may be able to find ways to reduce your expenses even further. For example, you could shop around for a lower cable bill or look for cheaper car insurance. Reviewing your expenses every six months can help you save more money.
Start Automating Your Finances
A great way to stick to a budget and make sure you’re saving money is to automate as many of your financial processes as possible. Set up automatic transfers to your savings and retirement accounts so that you never forget to save your hard-earned money. You can also set up bill payments to make sure that you’re never late on paying your bills. Automating your finances can help ensure that you’re consistently reaching the financial goals that you set for yourself.
Pay off Your Credit Card Debt
Credit card debt can quickly become a serious financial problem. To help tackle this issue, make sure that you’re paying more than the minimum balance on your credit cards every month. If you’re unable to pay the entire balance, at least make sure that you pay more than the minimum due. You should also look into consolidating your credit card debt into a personal loan or balance transfer card with a lower interest rate. This can help you save money in the long run and make it easier to pay off your debt.
Start an Emergency Fund
The best way to prepare for an unexpected financial situation is to start building up an emergency fund. This fund should be used for any unexpected costs that you didn’t plan for, like medical bills or car repairs. Aim to save at least three months’ worth of expenses, that way you will be prepared for the worst case scenario. This may seem daunting at first, but you can start small and build up your emergency fund slowly over time.
Research Investment Strategies
Too often, we put off investing because we don’t feel like we have enough capital to make it worthwhile. However, there are many different investment options for even the most modest of budgets. Research different investment strategies to find one that works for you. Investing can be a great way to grow your wealth over time, and it can open the door to long-term financial security.
Contribute to Retirement Accounts
Finally, you should make an effort to contribute to your retirement accounts if you haven’t already. Even if you can’t afford to save the maximum amount, contributing to retirement accounts like 401(k)s, IRAs, and 403(b)s can help your savings grow over time. Consider setting up automatic transfers to your retirement accounts each month to ensure that you’re consistently saving.
Making financial resolutions can be a great way to jump start your financial transformation, but it’s important to focus on consistent and manageable steps to reach your goals. Start with a budget and find ways to trim your expenses. Automate your finances and make sure you’re paying more than the minimum on your credit cards. Build an emergency fund and research investment strategies. Finally, don’t forget to contribute to retirement accounts. If you focus on these small steps, you’ll be in a much better financial situation by the end of the year.
