It’s a new year, which also means it’s resolution season. For many, that means hitting the gym or embarking on a new diet. It could mean going back to school or pursuing a new job. New Year’s is the time to assess your life and identify areas for improvement. Unfortunately, nearly 80 percent of all resolutions fail by February.1
This year, consider adding some financial resolutions to your list. With some simple changes in habit and behavior, you can significantly improve your financial picture.
Below are three financial resolutions to consider, along with tips on how to stay committed. If you’re worried about your financial picture, make 2018 the year you take action.
Eliminate or reduce debt.
Debt is a necessary financial tool for many Americans. It’s used to fund large purchases for things like homes, cars, education and much more. While debt may be useful in certain situations, it can also have a corrosive impact on your financial stability.
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 comes with high interest rates, making it difficult to pay off.
There are a few steps you can take to pay down your debt. One is to call your card companies and ask for a lower rate. That will help you pay off the balance faster. Also, set up automatic payments for more than the minimum amount so you can chip away at the balance. Finally, consider debt consolidation into a vehicle with a lower interest rate. Remember, every dollar that doesn’t go toward debt is a dollar that can go toward other goals.
Increase your savings.
Saving is a struggle for many Americans. While you may have a real desire to save more money, it may be difficult to do so. After all, life can be expensive. You may feel like every penny is needed for more urgent expenses, like child care or your mortgage.
The truth is, though, you probably have more capability for saving than you think. 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 your 401(k) plan. Set your contributions on autopilot so they’re deducted from your check. You can also set up automatic transfers from your checking account to a short-term emergency fund, an IRA or any other savings vehicle.
Stick to a budget.
Finally, and perhaps most important, 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 apps to software to even a basic spreadsheet. No matter what you use, the elements of a budget should be the same. You’ll want to list 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.
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? Let’s talk about it. Contact us today at Benefit Resource Partners. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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