5 Financial New Year’s Resolutions You Can Stand By

We all know that it's important to have a plan for our money. The new year is the perfect time to take a look at your finances and see what changes you should make in order to improve your financial future. And while everyone has different financial goals, here are five New Year’s resolutions every person can stand by.

Create Your Budget

The first step to having a well-managed financial life is to create a budget. To do this, make a list of all of your expenses and put them in categories. Create a plan to set aside money for emergencies and retirement, as well as save for big purchases. And remember, it’s okay to spend a little bit of extra money on yourself as long as your budget stays balanced.

Create An Emergency Fund

An emergency fund is essential to keeping your budget on track. It should be the equivalent of at least three months of living expenses so that you have money if an unexpected emergency arises.

Shit happens. And when it does, you’ll be glad to have a little stashed away for a rainy day. While an emergency fund does not need to be as large as your retirement fund, you should still aim for an amount that is equal to three-6 months’ worth of expenses.

If you can’t put this money away right now, make a plan to start in the new year. Putting some money aside to cover any unexpected costs will help you avoid going into debt and keep your finances healthy.

Make Extra Payments To Eliminate Debt

To get out of debt faster, try making extra payments every month towards your debts. This will help reduce the overall interest you pay on your debt and will also help build up your credit score more quickly. It’s also a good idea to actually have your debts split evenly between all types of debts – credit cards, weekend online loans, car loans, student debt, etc.

Control And Improve Your Credit Score

To make sure you get the best interest rate when you need to borrow money, it’s important to keep a healthy credit score. To do this, make sure to pay your bills on time and check your credit score at least once per year.

You can also grab some free annual credit reports from the three major credit bureaus by logging into AnnualCreditReport with your federal or state tax ID number.

Increase Your Retirement Contributions

Now that you know what you make each month, it’s time to start saving for retirement. The earlier you start saving and the more money you put away, the more money you’ll have in retirement. Aim to save at least 10% of your monthly income if possible.

If your employer offers a 401(k) or similar plan, try to contribute enough to receive any employer match that they offer. If not, open a Roth IRA and/or invest in other types of tax-advantaged retirement accounts through your company or on your own.

And remember, if you’re self-employed or otherwise not receiving a paycheck, you can always invest in a taxable account. There are many low-cost investment options available today that will do just as good of a job as their investment company counterparts.

Whatever you decide to do, don’t let the new year pass you by without making some changes to your finances. Know yourself and what your goals are, find ways to reach them, and build a solid financial foundation for yourself this year.

The Bottom Line

It’s time to make some changes in order to improve your financial situation. Be sure to put these five resolutions into practice to see the positive results they will have on your life.

The best times to practice frugality and save money are during downtimes. The best time to start saving for retirement is when you’re young and have a long time to invest. And the most effective way to make extra payments on your debts is through a budget, emergency fund, and automatic payment plan.

The key to any financial success this year is staying motivated and reviewing what you’ve done in the past year. If you can do that, then you’ll have the best opportunity possible to succeed wherever your goals take you.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes