Most New Year’s resolutions center around getting fit and improving our diet, but it can be difficult to achieve these goals if you’re constantly stressed about money.
So why not make some promises about financial health as well? There’s no time like the present to get your spending and saving in order.
Here are a few ways to start that process:
1. Set a goal
Have one clear, overriding goal for the year. Don’t be vague, such as “paying down credit card debt;” instead say: “I want to pay off 50% of my credit card debt, and I’ll do that by paying $ __ per month.” Being specific and setting measurable goals are key to a successful plan.
2. Open an Individual Retirement Account (IRA)
Even if you have a 401(k) plan at work, it’s never a bad idea to have some other savings mechanisms in place. If you have a financial planner or accountant, ask him or her for some recommendations on traditional or Roth IRAs based on your income, how many years you have until retirement and other specific factors. Already have an IRA or other investments? Meet with your advisor to make sure those are still performing in such a way that they’ll meet your long-term goals.
3. Set some priorities
List your outstanding debts by interest rate, and be the most aggressive toward the debts with the highest rates. It might even make sense to cash out low-interest certificates of deposit or savings bonds and use that cash to pay down higher-interest debt. (If you do, make sure to restore those savings when you can.)
4. Save your change
There are still a few of us left who use folding money, which often yields change. Have a bucket, jar, dish or other storage handy at home for those coins, and when it’s full take it to the bank. You’ll be surprised how much those nickels and dimes can add up.
5. Develop a budget
Sit down and list your monthly expenses (rent, mortgage, utilities, car payment), as well as credit card and other bills. Then list your income to see how much more you’re bringing in than sending out. Be sure to factor in extra money for savings, a rainy-day fund or an occasional trip to the movies. Apps like Mint can also help you do this online.
6. Look at your credit report
Many people pay for credit monitoring, or have received the service for free as the result of a breach such as that suffered by Equifax. Pull up those scores every month to make sure that all your accounts are properly listed — and your on-time payments are credited as well. And don’t worry about checking your score too much; it’s perfectly fine to check your own score monthly without penalty.
Spending an afternoon looking over bills, bank statements and other paperwork may not be the most exciting day, but getting your financial house in order is a great way to kick off 2018.