A brand new year provides the perfect opportunity to make meaningful life changes, including improved financial wellness. These four financial resolutions can help get your year off to a promising start.
1. GET ON BUDGET
Take charge of your finances by creating a budget. Start by calculating after-tax income and subtracting fixed monthly expenses. Then allocate portions of the remaining income for savings, important goals and a few things that just make you happy. If this sounds complicated, relax; today’s user-friendly budget apps can take a lot of the pain out of the process. To further simplify money matters, consider setting up automatic bill pay, an automatic savings plan and separate savings accounts for specific goals.
2. BUILD AN EMERGENCY FUND
Without a solid cushion, any unexpected job loss, medical challenge or serious property damage could lead to lasting financial hardship. An emergency fund with three to six months’ worth of expenses can protect your standard of living and offer peace of mind. Commit to making consistent deposits to this fund even if you can only spare a small amount each month. Because you may need to tap into emergency cash at a moment’s notice, choose a vehicle that gives you easy access, such as a savings or money-market account.
3. IMPROVE YOUR CREDIT
You likely know that credit scores affect financing approval and interest rates. But the influence of those three little numbers actually stretches much further. Prospective employers and landlords frequently check credit, so low scores may mean missing out on the best jobs and apartments. Credit scores also may affect insurance premiums, mobile phone offers, vacation costs, and even whether utility hookups require a cash deposit. For top scores:
- Pay all bills on time.
- Keep credit card balances at no more than 20% to 30% of the credit limit.
- Carry a mix of debt types such as credit cards, auto loans and personal loans.
- Monitor credit to catch and correct any errors or problems.
4. KNOCK DOWN DEBT
Even with a great job, high-interest debt can sabotage financial health. To dig out from under this burden, consider concentrating efforts on your highest interest debt first while continuing to make timely smaller payments on all other obligations. When the first balance is satisfied, focus on the most expensive remaining debt and continue this way until you’re debt-free.
Smart money resolutions boost financial stability not just immediately but over the long haul as well. The bonus takeaway is the confidence that all life’s remarkable milestones and challenges won’t break the bank.
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