Time to Make Some Financial Resolutions
Well, another year has arrived and for many people health is always a top priority. Regular gym goers are annoyed by the onslaught of people who are so excited to kick off the new year on a healthy note only for it to all fizzle out by February, and for some they don’t even make it through January! Let’s be honest though, that sure makes the regular gym goers happy to be able to get back to a normal routine again. What if January looked differently?
What if we set our resolutions a bit differently than we have in the past. Sure physical health is important, but have you considered your financial health when it comes to making your resolutions? And even more importantly, are you doing it in a way that makes it possible to stick with it and form a habit rather than just fizzling out and returning to old habits before the snow even thaws?
Here are a few tips for setting yourself on the path to financial health!
Budget – I know this seems pretty obvious…but are you doing it? If you are, how well do you stick with it? It can seem a bit daunting when doing a budget for the first time, but once you have it set-up the maintenance is pretty minimal. Plus, then you will get to see how you are spending your money and identify ways that you could be budgeting better. Most people are quite surprised to see how much they are actually spending on certain things. Budgeting isn’t just about cutting expenses either and can be a great way to figure out if you can afford that new vehicle or bigger home. Don’t worry, if budgeting sounds great but the thought of having to create a spreadsheet terrifies you, there are lots of really great apps out there that do all of the heavy lifting for you and allow you to simply and easily create and follow budgets.
Emergency Fund – What would happen if you lost your job today? Does the thought make your stomach turn a little bit? I am sure it does for most of us because no one wants to lose their job, but are you financially prepared for the unexpected? According to recent research, only 39% of Americans have enough money in their savings to cover a $1,000 emergency. If you fall into that category, then maybe this is a great year for you to have a resolution to build up some cash reserves. The industry standard is to have three months’ worth of living expenses saved up in order to be prepared for the “what ifs” of layoffs, home repairs or a totaled out car. That may seem impossible to some, but you don’t have to shoot for the moon right away. Review your expenses (now that you have a budget and know where your money is going) and figure out what you can realistically afford to put into savings each month this year. Then next year, try to increase that amount until you have built up a good reserve. Then, don’t be tempted to dip into it for things that are not true emergencies.
Unhealthy Debt – We are a nation that lives on debt and that can lead to more debt which becomes a cycle of debt. Now, not all debt is bad debt, but be smart about it. To get started make a list of all of your debt starting with the highest interest rates at the top and start paying those off right away. Depending on the debt you have, it may make sense to look into a low interest credit card to pay off the higher interest rates which can save you money in the long run. Back to that budget…you may also find that you have more money to push towards debt reduction now that you know how your money is being used each month. Maybe even replacing that pricey gym membership with a more economical online alternative.
There are so many things to think about and options when it comes to budgeting and becoming financially healthy that we couldn’t possibly cover it all here. Hopefully, these things will get you thinking about your financial health and how you might make it a priority in this new year. And for all you gym goers out there, don’t worry, by February things will be back to normal!
