A new year can be a fresh start and a great opportunity to leave bad habits behind and foster some good ones. It can be a great time to set some realistic and achievable financial new year resolutions as well. It’s highly likely that you didn’t follow your 2020 new year resolutions because of the COVID-19 pandemic if you made any at all in the first place.
Stats reveal that only nearly half – 46% of the people who set new year resolutions succeed in keeping them after 6 months. The number drops to 4% if the people have goals but no resolutions. If your resolutions center around saving money – be it increasing your retirement contribution, investing more, or spending less every day, you’re going to want to beat those odds. If you need some help in setting some realistic financial new year resolutions, consider the following.
A good and easy start to set a financial new year resolution and actually sticking to it is budgeting. It’s the most important thing you can do to be financially successful. There are a lot of wealthy people struggling financially because they don’t manage their money well. It might be intimidating when you’re doing it for the first time, but you shouldn’t let that stop you.
- Set a realistic budget for the month, track your expenses and income by writing them down, or using a spreadsheet, or an online budgeting tool to analyze your expenditures.
- Aim to focus on a weekly budget instead of a monthly one because looking at your budget often, is essential to curb excess spending.
Pay Off All Debt
Paying off debt helps you have immense control over your finances. Loans and credit are necessary for many of us to make large and small purchases. So managing your debt should be your next important financial new year resolution you set for yourself. A lot of people lose their lives to the vicious debt cycle and you certainly don’t want to be one of them.
- Make paying off your debt, the most important priority, if you come across bulk money.
- Limit credit card use and try to pay off balances in full every month to avoid the interest charges. If you find it difficult or unable to pay off the balance in full every month, you might be spending too much money on a lifestyle you can’t afford.
- Pay more than the minimum payment amount whenever you can to pay off the debt faster.
- Get a part-time secondary job for some extra bucks.
Start saving money
The difficult process of saving money can be much easier if you work out a budget and make a few cost cutbacks. By establishing a savings habit now, you are opening doors for a smooth post-retirement life.
- Reduce eating out and buying your coffee outside.
- Cut down on groceries.
- Unsubscribe from an entertainment platform (like Netflix or Prime Video) you rarely use.
Create an emergency savings fund
Having an emergency fund for expenses is a great way to protect yourself when you are hit with financial hardships and can help prevent you from going into debt. It provides peace of mind if you lose your job, become too ill to work or have to cover a major medical emergency. Emergency savings can be a lifesaver when you come across expenses you haven’t budgeted for.
Save for your retirement
If you’re already saving for retirement and could be putting even more money away, do it. Starting early on saving for your future gives you a huge advantage over people who don’t. The younger you start saving and investing, the better chances you have to have a financially secure future because you can let compound interest do the heavy lifting.
Investing enables you to grow your money quickly. Many people invest money successfully on their own, but if you are just starting out, find yourself a financial broker to help you achieve your goals. It’s never too late to become an investor. You may be well into middle age before realizing that life is moving quickly, requiring a plan to deal with old age and retirement, when investing can come in handy.
- Invest in mutual funds (you can start with little).
- Hire a financial broker if you’re a beginner.
- Read books on investing.
- Learn about the stock market.
There’s a lot you can do to improve your financial health. Take it one step at a time to not get overwhelmed by everything. When you’re setting financial new year resolutions, put down clear and concise goals with a plan of action as this helps you stay focused to meet those goals. At Salt, we’ll be happy to help. Join the waitlist!