If you’re like most people, an annual flip of the calendar can be the motivation you need to set new goals. Healthy eating, improved fitness, and increased savings are the most popular New Year’s resolutions. However, achieving and maintaining good physical and financial health requires a long-term commitment to consistent habits.
While 90% of Americans are confident they can keep their resolutions, reality tells us something different. A University of Scranton study found that only 19% of people stick to their resolutions after two years. So, what can you do to make sure that your January 1st commitment becomes part of your new normal?
Whether you plan on changing your eating habits or your finances, keeping your goals simple might bring better results. Make one or more of these simple money resolutions for a Happy Financial New Year.
Use a Monthly Budget
Unless you realize where your money is going each month, it’s next to impossible to see where you can make financial improvements. A budget is a financial planning tool that requires you to first identify your total household income along with fixed and variable expenses. Only then can you realistically determine how much money you have available to meet other financial goals.
Budgets also help clarify how long it will take to achieve those goals. Budgeting 101 is a resource that can help you build your budget quickly. This January, review this helpful guide and complete the charts and tables. They can assist you in developing strategies for managing debt and reaching your financial goals.
Check Your Credit Report Every Six Months
Your credit health has a significant impact on your ability to save money. Negative data on credit reports makes it difficult to reach financial goals, as poor credit health can result in higher interest rates, limited job prospects, and even denial of apartment rental applications.
Boost your credit health, and you’ll likely have more money available to reach your savings goals. Before you can improve your credit health, you first need to understand what’s in your credit report. There are three separate reports, and each one should explain the credit behaviors negatively impacting your credit profile.
Order copies of all three reports from AnnualCreditReport.com, review the contents of each one and dispute any errors. Add a bi-annual review of your credit reports to your calendar reminders.
Read Two Personal Finance Books by December
Commit to reading two books on personal finances this year to change the way you think about money. Pick one topic that speaks to your short-term financial goals, such as paying off debt, and another that helps answer questions related to a long-term goal, like retirement savings. Mark specific months on your calendar to help you stick to this goal. For example, schedule the reading of one book in February and the other in September.
Save $500 Before July
Setting aside money in an emergency fund account is one of the most important steps you can take to improve your finances. When your car breaks down, your child has an urgent medical need, or Fido requires an unexpected vet visit, an emergency fund can keep you from turning to high-interest rate credit cards or loans to cover the expenses.
An emergency fund totaling six to nine months of expenses is ideal since it's used to pay bills if you experience a job loss. But, if this amount seems overwhelming, start with a smaller goal of $500 or $1,000. Open a Prince George’s Community Federal Credit Union Savings Account, then add your federal income tax refund check, wage increases, or income from taking on a part-time job to quickly build your savings nest egg.
Action taken in the New Year to improve your finances can pay dividends for years to come!
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