3 Financial Resolutions to Make (And Keep) In 2018
It is the start of a new year, which means it’s time to get started on a new list of resolutions! This is the time of year when many people embark on new self-improvement action items, like eating healthier or advancing their education. While most resolutions come from the best of intentions, most don’t last. Surveys show that nearly 80 percent of all resolutions fail by February.1
This year, you may want to include some financial items on your list of important resolutions to keep. If you are at all concerned about your financial future, make 2018 the year you take action. With just a few simple changes in habits and behavior, you can significantly improve your financial picture. The key, of course, is to stay consistent and stick with your resolutions. Below are three important financial resolutions to consider, along with a few tips on how to stay committed throughout the year:
1.) Pay Down Your Debts
Although we don’t usually encourage it, debt can be a helpful tool in some instances. You’ve probably used debt to finance the purchase of homes, cars, education and more. However, while debt may be useful in certain situations, it should also be used cautiously and wisely or it can have a corrosive impact on your financial stability.
Debt is a fact of life for many Americans. The average American household has more than $173,000 of debt, $16,883 of which comes from credit cards.2 Credit card debt can be especially problematic because it often comes with high interest rates, making it difficult to pay off.
Fortunately, there are a few steps you can take to get your debt under control. One is to set up automatic payments for more than the minimum amount so you can chip away at the balance without even really thinking about it. Also, consider consolidating your debt into a vehicle or home loan with a lower interest rate. Remember, every dollar that doesn’t go toward debt is a dollar that can go toward other goals.
2.) Increase Your Savings
Saving money can be a challenge. After all, life can be expensive. Even if you have the best intentions to save, you may feel pressure to put money towards more immediate needs, like child care, your mortgage, debt payments, or basic living expenses. It can often be difficult to allocate money towards the future when you have pressing needs right now.
However, you probably have the ability to save more than you think you can. For many people, the key to saving is taking the decision-making out of the equation. If you set your saving efforts on autopilot, you won’t have to make a decision about whether to use the money for bills.
One great way to do this is with a Bank On Yourself plan. Set your contributions on autopilot so they come out of your checking account automatically every month, and you’ll be accumulating savings without hardly noticing! You can also set up automatic transfers from your checking account to a short-term emergency fund, an IRA or any other savings vehicle.
3.) Create a Budget
Finally, and perhaps most importantly, make 2018 the year you start using a budget. A budget can be the most powerful financial tool at your disposal. Unfortunately, nearly 60 percent of Americans don’t use a budget.3
You can use a wide range of tools to develop your budget, from free apps like Mint.com to software to even a basic spreadsheet. No matter what you use, the elements of a budget should be the same. You will want to list out all your income sources and all your expenses. Break your expenses into categories such as housing, auto, child care and others. Then track your spending so you can see where your money goes every month.
You can use your budget to make purchasing decisions. As you become more disciplined with your budget over time, you should start to see your expenses go down, which should then free up cash for savings and other goals.
Ready to implement your financial resolutions and make sure they actually happen this year? Let’s talk about it! Contact us today for a free financial evaluation, and we can help you analyze your needs and implement a plan that helps you achieve all of your most important financial goals.
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