The New Year is a perfect time to overhaul your life. The first place to start is making financial decisions that can get you closer to your monetary goals. It's easy to make resolutions, but not so easy to keep them. This is true for all resolutions, but especially financial ones. The key for all resolutions is to set achievable, actionable goals. Don't be ambiguous and don't aim too high. So, if getting your financial life in order is a resolution you would like to make this year, here are a few you might consider adding to your 2019 itinerary.
Prioritize Your Debts
Did you know that not all debt is created equal? Make a list of all your financial obligations and organize them by the interest rates. Debt with the highest rates (most likely your credit card debt) should be paid off immediately. It does no good to invest funds while you are paying 19 percent or more in interest each year.
I suggest putting all this financial information into a spreadsheet. I want to warn you though, this can be a frightening activity for most people. It's like weighing yourself when you know you have over eaten. Nevertheless, it's critical in establishing your plan to rid yourself of unnecessary debt. I suggest having a cocktail or two before you determine your grand total.
Once you have all of the debt and interest rates established, then select the best repayment approach for you. Some people prefer paying the smallest debts first while others like to pay the highest interest rate debt first. Select the option that works best for you.
Save 15% or More of Your Gross Income Most people say they want to save more, but don't know how much they should save or where they should save it. The best way to be a successful saver and achieve this goal is to set up an automatic transfer from your checking account to your savings account for the same amount every month. If you find you need some of that money in the future you can always transfer it back.
Set up Automatic Bill Pay Everyone's life gets frenzied, and it can be tedious keeping track of what bill gets paid when. Technology has made it easy to schedule your bills to pay on their due date automatically. Credit Union members have Bill Pay access to set this up in one place, and you can choose if you want to manually schedule it or automate it.
Close Unnecessary Accounts Most banks charge fees for everything. Is it really necessary to have several credit or checking accounts? Although there are exceptions, in the vast majority of cases the answer is a firm no! If you need to have multiple accounts, you may want to check out your local credit union, which in most instances do not charge checking and savings fees.
Earn Money Doing What You Love To Do Most everyone has a passion. Have you thought about turning your passion into profit? The world is full of amazing occupations. Find one that works for you and love what you do while paying off your debt.
Track Your Expenses Daily Tracking your daily expenses will make you mindful of everything you spend. There are many free apps like Expenses OK and Spending Tracker that can help.
Instead of Paying Off Debt Pay off a little each month Reducing your debt is a great goal, but it's not going to be easy to do. It's best to have a set plan for payoff, and picking an amount each month is a great way to stay on track. If you have seasonal income, you could try setting a yearly goal. Just remember to keep it attainable.
Go on a Cash Diet
If you spent a great deal of money on your friends and family this holiday season and your credit cards begin to bulge, then my suggestion is you go on a cash diet for the next six months. Limit your spending to a certain amount of money every week and see if you can live off that amount. Being conscious of your money and the way you spend it is the first step in becoming financially healthy.
When I say a cash diet, I mean actually paying for items with cash. Swiping your debit or credit card shuts down our brains and we don't even think about what we are buying. It's like it isn't happening. When you make a cash payment, you are forced to keep your brain connected. I believe a cash diet is a great way to keep your spending under control.
Collect Loose Change
Start a piggy bank for adults. Every time you pay cash for something and they give you pocket change, go home and throw it into a container. If you do this over the course of a year, you have the potential of saving several thousand dollars.
Knowledge is Power
If you want to learn to do something you read a “how to” book or ask someone to show you. Reading financial books can put you in touch with ideas you can utilize in your own financial life. By reading “The Intelligent Investor” or other financial periodicals you can pick up on ideas, philosophies and techniques of the most talented minds in the financial circles. Committing yourself to educating yourself about financial health is essential to creating your long-term wealth.
Remember; set yourself up for financial success in 2019! Staying on track will motivate you to keep going throughout the year. Start small and keep it real. Soon you'll be on your way to becoming a personal finance champion.