Each December, many people mark the arrival of the holiday season by going overboard on their Christmas shopping. As a result, it’s not surprising that many of them end up busting their Christmas budgets. As the New Year approaches, they realize the folly of their ways. Then, they make various New Year Resolutions for becoming more responsible financially.
The Top Financial New Year’s Resolutions You Must Consider Adopting in 2015
To ensure that you get a grip on your finances, here is a list of some of the best financial New Year Resolutions you could consider.
- Get Out of Debt: Whether you have credit card debt or any other kind of debt, a large percent of your monthly instalment often goes toward repaying the interest component of the debt. Therefore, the longer your debt continues, the more interest you will end up paying. Ensure that you save more money and make extra principal payments. It will help you get out of debt faster.
- Build an Emergency Fund: When you get your paycheck, ensure that you retain some amount each time. Use this money for building your emergency fund. Various incidents such as illnesses, expensive repairs, unforeseen expenses etc. often take place unannounced. Finding the money to pay for them can be difficult. With an emergency fund, you will be able to save yourself some unnecessary hassles and tensions. Ensure that your emergency fund has funds worth three to six months of your monthly salary.
- Work on Your Budget: Not many people spend enough time putting together their budgets. As a result, they often end up spending more than they earn. Avoid falling into the debt trap. Prepare a simple spreadsheet that details your earnings, your planned expenses and your forecasted savings each month. Then, classify any big ticket items that you might want to purchase into “wants” and “needs”. Review whether you need them (or can afford them) as and when the time to purchase them draws near.
- Pay Yourself First: Building an emergency fund is not sufficient. Ensure that you save an additional amount each month – depending on your expenses. By saving $50 - $100 each month, you will have a saving of $600 - $1,200. It could be quite handy in the future.
- Cut Down Those Unnecessary Expenses: This does not only mean reducing your spends on items that catch your fancy. It also means ensuring that you make your payments on time – for everything. By making your payments on time, you will avoid having to shell out more money toward late fees, fines and penalties. If you’re not very organized, consider using apps like Mint. Mint can help you manage your finances and monitor your daily spends too.
- Analyze Your Previous Spends: Collate your expenses of the past year into a single spreadsheet. Categorize them into various heads of expense and review them. You will find certain expenses that you could have avoided. Ensure that you avoid making similar purchases in 2015. In addition, see if you can reduce your power bills or mortgage repayments. This analysis will help you find ways to cut corners realistically.
- Invest in Your Future: You could consider learning about stocks and bonds and invest in them. They could help you multiply your money. However, do not ignore your future either. Take some classes for acquiring more qualifications, which could improve your job prospects and your earnings.
- Declutter Your Space: Oftentimes, people purchase things on a whim. Then, they find that they do not need or use those items at all. Consider listing such items on websites like eBay etc. By selling them, you will be able to get rid of the unwanted stuff you have. At the same time, you will be earning something in the bargain too. Tip: Consider adding the money you get to your additional savings fund.
- Review Your Levels of Cover: Ensure that you have ample insurance cover for yourself, your family and your parents. In particular, review any changes that have taken place concerning the Social Security and Medicare. Ensure that you have appropriate levels of cover for your life, health, property and automobile.
- Keep Your Long-Term Financial Security Goals On Track: Review your retirement portfolios. Ensure that you optimally balance all the elements it comprises. Check whether your investment portfolio is appropriately diverse. A diverse investment portfolio can safeguard you from losses in case one of your investments fares badly. If you have children who will be going to college soon, consider setting up a college fund for them. Given the increasing costs of tuition and fees, the savings you make today could be invaluable.
The common refrain about New Year Resolutions is that people make them in January and forget them by February. Not many people take these resolutions seriously. However, people who take the time to plan, often end up succeeding in their objectives. Consider adopting some of the resolutions given above, based on your personal and financial goals. It might help you achieve greater financial stability by this time next year.
When people think of New Year Resolutions they generally aim to do things that they could not do in the year that went by. However, when it comes to financial resolutions, there might be things that you might be better off avoiding as well. Read about 7 Bad Financial Habits You Should Avoid in 2015.
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