It’s that time of year again. Everyone is talking about their New Year’s Resolutions, and you’re wondering what to write on your list. But with around 80 percent of New Year’s resolutions not even making it past February, it can be hard to keep those annual goals. This year, no matter what your financial resolutions may be, we’ve got ideas on ways to keep them, long after everyone else has given up on theirs.
6 Financial Resolutions and How To Keep Them
Create a Budget
One of the best resolutions that will move your financial future forward is learning how to create — and stick to — a budget. Zero-based budgeting is the method that most experts recommend (meaning that every dollar coming in is accounted for in one way or another), which is a great way to know exactly where your money is going, with few surprises. To begin budgeting, start by creating two lists: one that shows your money coming in, and one that shows where it is due. With this information, you are well-armed to make solid financial decisions and move into more progressive budgeting options. For a few detailed, zero-based budget options, check out YNAB (You Need a Budget) or Every Dollar.
Get Out of Debt
Most of us don’t like carrying around large sums of debt, but the thought of digging out can be scary in its own way. Setting a resolution to get out of debt can be as easy as planning out a budget and focusing on paying down your debts one by one for the biggest impact. Check out online calculators that help you figure out what to pay off and in what order. But first, make sure you put aside some money into savings to cover any potential problems that may arise; having to pay for a new refrigerator when you don’t have any financial reserves can completely blow your debt pay-down plan.
Spend Less and Save More
This is one of the easiest resolutions to make, but possibly one of the hardest ones to keep. To reduce spending, take a look at what in your budget might not be necessary. Morning coffee? Eating dinner out? A magazine subscription you don’t use? Trimming any of these can mean instant money back into your pocket. Just make sure you don’t spend that money haphazardly somewhere else; use it to move forward on one of your other financial goals. Or, simply fill your savings account so you have a cushion while pursuing your other financial goals.
Raise Your Credit Score
Raising your credit score isn’t easy, and it takes time. But is one of the best ways to make your future self more financially secure, decrease the amount you pay in interest, and give yourself more spending power. People with good or great credit scores tend to have more access to credit if needed (perhaps in a financial crisis), and they also tend to get better interest rates on car loans and mortgages. To raise your credit score, pay attention to the details: make sure you are making all payments on time and that both your debt-to-income ratio and credit utilization stay low. For best results, consult your local financial advisor or Spero specialist for a free credit check-up.
Get a New Car
Deciding to buy a new car is a big decision. So if your New Year’s resolution is to buy a new car, consider a few things. Do you need to save up money for a down payment? Do you need to work on repairing your credit for 6 months prior so you can get the best rate possible? And, does a new car, along with insurance, gas and repair costs, fit your overall budget? With these insights, you can make a solid plan toward achieving your goal without creating any possible financial problems for yourself.
Like buying a new car, this is one of those resolutions that requires a bit of planning ahead of time. What type of travel are you considering and for how long? Where do you want to go, and is there anything special you want to do while you are there?
One week-long cruise is obviously a far different financial commitment level than hiking the Appalachian trail for six months, so if traveling more is one of your New Year’s resolutions, you need to focus on the details. Once you have that information, revert back to your budget and start filtering money into your savings account. But whatever you do, don’t fill a credit card with travel expenses — you’ll find yourself further behind on financial goals when you get back, because they’ll still be here waiting for you.
/Whatever your financial goals are for the future, Spero can help make them a reality. Visit one of our locations and speak to one of our specialists to get started.