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5 Great Financial Resolutions for 2016

5 Great Financial Resolutions for 2016

The new year is a perfect excuse to check in with whatever needs revamping in your life, and your finances are no exception. Health and finance are the two most common resolution categories, but considering only about 8% of people achieve their resolutions, there’s a good chance your resolutions aren’t working for you.

Most people stick to vague, overarching resolution ideas, but don’t have the details to make them happen. Here are five of the best resolutions you can try this year, including the steps to make them happen. Cheers to 2016!

Set a Budget You Can Stick To

The budget is the backbone of your entire financial plan. If you set one resolution this year, this should be it.

But don’t stop at “set a budget.” That’s a surefire way to fail by mid-January. Take action and get specific with your plan!

Create a spreadsheet with percentage breakdowns of what goes where each month. Use the cash-only envelope system. Look into using a budget app like Mint to help you track your spending.

Whatever you decide, come up with savings goals and specific percentages to help keep you from overspending.

Create a Debt Repayment Plan

“Pay off debt” is another resolution that needs an attack plan to be effective. It helps to come up with a debt payoff timeline that you can hold yourself to, and then funnel money at your debt accordingly.

Start with smaller debts first and work your way up. Or choose specific debts to pay off within the year, like your car or credit cards. Don’t forget to look at each interest rate for the specific debt you have, because that can help you decide which to tackle first.

Again, keeping it detailed will help you stick to the goal you’ve envisioned.

It also helps to have a clear reason that you’re paying off your debt. This works for any resolution, but especially when putting your money toward debt instead of something you want to buy.

What drives you to get the debt paid off? What will it feel like when you’re debt-free? Keep those motivations in mind when you’re feeling hopeless about paying off your debt.

Save More Money

The is one of the most common financial resolutions people set, but there’s a reason people don’t stick to it. Once again, it lacks actionable steps!

At the end of the year, really take a look at where you are financially and where you need to be to feel more comfortable. Maybe you’d like to add more money to a 401(k), create your kids’ college funds, or cushion your emergency fund.

Figure out your goal, break it down into monthly savings goals, and factor that into your budget. Then see the next resolution below to ensure your goals are being funded.

Automate Your Finances

This is a simple step that can make a massive difference a year from now. First of all, automating your payments will keep you from missing payments and accruing late fees and penalties.

Second, you won’t be able to drag your feet on those payments. They are automatically coming out of your account, so you can’t delay them to buy something else.

And third, you can set up automatic transfers into your savings account. If you have money coming right out of your paycheck and going to your savings, you won’t look at it like spending money. Even a small amount every month will add up.

It’s helpful to figure out how much you’ll have in a year, as well. Saving $100 might not seem like it’s worth it at first, but if you keep in mind that it will be $1,200 at year’s end, you might be more motivated to keep it going.

Review Your Credit Report (and Maintain a Strong Score)

This is a given each and every year, but it’s also easy to forget about if you’re not making any major purchases. You can check your credit report for free once a year at annualcreditreport.com.

This shouldn’t just be on your radar if you’re buying a house or shopping for a new car, either. Look up your credit report to make sure everything checks out. You’ll want to monitor it for suspicious activity or debts you didn’t realize you had.

You also want to maintain a good credit score. The best place to start is by consistently paying your bills, and then checking over your debts. Aim to keep your credit card balances low (ideally 30% or lower) and pay down your loans as much as possible. Also be mindful of how many lines of credit you have open; be careful not to open or close too many simultaneously!

Keep balances low, pay bills in full and on time, don’t open (or close!) too many accounts at once, etc)

Staying conscious of your overall credit health can help guide your New Year’s resolutions for a much stronger financial 2016.

 

Heather SwickAbout the Author: Heather Swick is an author, freelance writer, and editor who has worked for news outlets, national magazines and blogs. She is driven to help others achieve their career and financial goals and share her own experiences along the way.