Creating smart financial habits for the New Year may sound difficult. There are many ways you can improve your savings, debt, budget, and more. Don't know where to begin? Find your financial New Year’s Resolution below!
1. Create a budget
To create your budget, start by making a list of all of your recurring expenses for every month. Your recurring costs should include necessities, such as food, healthcare, housing, etc. An important aspect of budgeting is ensuring that you cut out any unnecessary expenses. Reconsider some monthly subscriptions; you may not be utilizing them enough to get your money’s worth. This will help you not to spend more than needed each month.
2. Pay your bills off as soon as possible
This is going to help ensure that you never miss a payment or have a late bill. Even consider paying your bills as soon as you receive your paycheck. This will guarantee you have enough money to pay each bill. Another bonus is it allows you to truly understand what you can and cannot afford each month.
3. Create a plan to pay off more debt
Start by making sure you are paying the minimum amount on each of your accounts, whether they are loans, credit cards, or something else. Paying your minimum amount each month can be very beneficial, but won’t get rid of your debt that fast. If you have extra money planned into your monthly budget, consider paying extra on one of your loans or credit cards that has the most interest. This will ensure that you aren’t paying way more than necessary.
4. Add to your emergency fund
If you don’t have an emergency fund, the New Year is a great time to start one. Emergency funds, or sometimes called rainy day funds, are very important and helpful when it comes to any unexpected expenses. There may be times you need a large amount of money, and it will be essential to have some extra cash. You may find it helpful to build up a year or more of funds to live, in case something were to happen.
5. Contribute to your retirement fund
Starting to save for retirement is essential when you are young because this gives your funds more time to generate interest. So, in the long run, you will have more funds then what you started with. Also, most employers are willing to match your contribution to give a little extra boost. Try to set a goal of how much you want to be saved in your retirement account by a certain age. This will allow the interest to work its magic. Lastly, keep in mind you don’t have to save your retirement funds in a traditional account if you aren’t ready. Start by putting your money in a savings account.
6. Understand your credit score
Start off your new year by understanding what your credit score is and how it can affect you. For instance, is your credit score affecting your ability to rent an apartment or take out an auto loan? Understand what types of factors affect your credit score, such as payment history, total amount owed, and credit history. Is there any negative, inaccurate information on your credit report? Having incorrect information on your report can impact your score and cause you to have a lower score than necessary.
7. Learn more about finance
There are many different aspects of finance. If you feel that you could be more educated towards any subject, make it a goal to read a new article or listen to a podcast about it every day. For example, learn more about saving and budgeting. After you have some basic knowledge, put your new skills to the test, and see if you can be a successful saver. In the long run, becoming more financially literate may help you with your personal financial decisions. Take a quiz to determine your Credit Card IQ.
Have you figured out what your financial resolutions for the New Year are? If not, start by figuring out what some of your financial weaknesses are and start from there. It may be as easy as sticking to your monthly budget!
👍Want to learn more about budgeting? Check out Budgeting 101 for College Students.
😎Get more of your finances in check by learning how to start your 401(k). Check out What 20-Somethings NEED to Know About 401(k) Retirement Plans.