These Tips Will Make You Rethink Your Financial Resolutions
Almost everyone with a list of New Year resolutions has at least one financial goal. As with most other resolutions, however, not many people achieve the financial success they plan to achieve each year. If you are among those that did not achieve 2017 financial goals it is probably because you did not follow through with your plans.
If you wish to change that in 2018, you have to approach your finances in a better way and this starts with the resolutions.
Diagnose your 2017 finances
In order to improve your financial situation in the coming year, you must first identify what went wrong this ending year. Go through your income and expenses month by month. Note what you did right, the expenses you could have avoided, unnecessary loans etc.
If you don’t have a record to refer to, that’s the first indicator that you were not financially disciplined.
Set new financial goals
This is the first step of making your New Year resolutions on personal finances. You will only be able to make realistic and actionable plans if you have a clear vision of what you want to achieve. Make the goals as specific as possible.
For example, instead of stating that you will repay your loans, indicate the loans you have and the order in which they will be repaid. You can also break down the goals to monthly and quarterly goals.
Repay your loans
Repaying your loans at realistic loans sets you on the right path to financial success. You will improve your credit history thus making it easy for you to get loans for either emergency or bigger projects in future.
If you have a number of loans, you must make an intelligent repayment plan. The aim is to repay the loans within the shortest period at minimum cumulative charges. Prioritize the loans with the worst terms such as high rates and the nonflexible conditions. If possible, consolidate your loans by taking one loan with better repayment terms and repaying all or some of the existing ones.
Work on improving your credit score
While it is advisable to stay off debt, an emergency may occur when you do not have enough cash at hand. Such a situation may force you to seek a loan. By making deliberate plans to improve your credit score, you will have a higher chance of getting a loan in your hour of need. A great credit score also ensures that you get better loan terms and higher loan limits.
To ensure you are on the right track, keep checking your credit rating on a regular basis and adjust accordingly.
Without disciplined budgeting, you will find it hard to achieve your financial goals. As with the goals, you need to prepare a well-thought and detailed budget and stick to it. Avoid the expenses that you noticed were unnecessary in your previous budgets.
Creating a budget is the easier part. You need to be strict with yourself such that you do not go back to making unnecessary purchases. Since you already have your list, purchase in bulk promptly after you are paid. Buying in bulk is relatively cheaper and also reduces your shopping trips thus less temptation to make unplanned purchases.
Set up an emergency fund
However well you try to plan your life, something may come up unexpectedly. Emergencies may range from medical issues to a broken home appliance or car. Payday loans or pawn loans are the go-to option for many people in such scenarios.
Although convenient, such loans charge high interest rates and demand a lot of money for installments. You can however, save yourself from such challenges by setting an emergency fund. At first aim to save enough to sustain you three months, then increase to six months, 12 months and so on.
It’s not too early to save for retirement
Once you retire finances are the first to take a hit because permanent jobs are much harder to come by. To avoid a drastic change in your lifestyle, you need to start saving as soon as you can. If need be, ask a financial advisor to help you open an Individual Retirement Account.
Low-budget healthy lifestyle
Your wealth is of little significance if your health is not good. Therefore, as you make your New Year financial resolutions, include a plan to live a healthy lifestyle. This may include, but not limited to, exercising and dieting.
Unfortunately, modern gyms and similar fitness establishments are quite expensive. Instead, you can try cheaper alternatives such as jogging, walking and working out at home with the guidance of videos.
Make more money
Now that you have made plans for disciplined spending, there is no harm in trying to increase the amount you earn. You can try to get a new job that pays better or a side hustles.
Explore your hobbies and skills and see if there is any of them that you can use to increase your income. If there is none, teach yourself a skill that can.
Work on your financial literacy
Having a good understanding of finances will help you in managing your personal finances. If you are a total novice on finance, start small and commit yourself to read a book at a certain regular interval. Some aspects of finance are also very dynamic.
Therefore, even if you have some prior knowledge, keep yourself updated by reading either books or online material. You can learn, for instance, about new apps and software that you can use to better manage your finances.
Your financial status will greatly determine the success of most of your New Year resolutions. It is therefore paramount that you make solid plans for your personal finances before even making other resolutions.
Making solid plans, however, is just the first step. You must commit yourself to follow stick with the plans and budget. Following the plan will help you attain financial discipline and leave you with some surplus income to invest. Good New Year financial resolutions are therefore essential for both your short-term and long-term financial stability.