When it comes to welcoming the new year, it’s all about making new resolutions. It’s likely that you are pledging to hit the gym in the new year if you are having a problem in managing your weight. It’s also likely that you are promising to volunteer in community charity organizations if you’ve never done it before. Nonetheless, you may have forgotten one important detail that has the power to determine the shape of your life – finances. How are you planning to spend your money in the new year? Do you have plans to save or invest your earnings?
Though making financial resolutions may be harder than you think, it’s a great idea to make them. You are probable to stick to them if you have them laid down. A study by Fidelity seems to agree with this statement. According to it, about 40% of people in the US who made financial resolutions in 2018 were able to realize them. The study further suggests that the percentage is expected to improve in 2019. When making financial resolutions for the new year, you have to be smarter so as to reduce your expenditure while promoting your savings. Here are 10 smart ideas to copy and ways to fulfill the resolutions:
- Work with a Budget
If you are not used to using a budget, it’s time you consider it. It can be a great tool for helping you save since you can use it to regulate your spending. It will enable you to understand clearly where your finances are going each month. To successfully work with a budget, you need to determine the smallest financial figure that you can live off on a monthly basis. The figure should reflect food, loan repayments, transportation, utility bills, and clothes. Whatever money that remains should be considered as savings.
- Get Financial Education
The Global Financial Literacy Survey suggests that 57% of individuals in the working sector are financially literate. But still, there is a need for improvement. Most people consider enrolling in computer classes and cooking lessons while others prefer taking up emergency training and happy living classes. While these are important, you also need financial literacy training. It’s what will help you create and run a practical budget. You can start online as there are amazing financial experts to consult. You can take up the online classes and sign up for their newsletters.
- Improve Your Earnings
Sometimes, you don’t have to reduce your expenses to save. All you need is a way to increase your income. If you are employed on a meager salary, you should consider doing a side business. If you are into a specific business line, you should consider diversifying your investments. All these are ways to make more money in order to better your life and to avoid financial risks.
- Get Out of Debt
If there’s one major reason why most people don’t save it’s because of debts. You have to start with credit card debt since it’s the primary source of concern. A study by CreditCards.com shows that the average borrower borrows about $5,472 using credit cards a year. The figure is very alarming considering that this amount is expected to be paid back. According to Freedom Debt Relief, the solutions to getting out of credit card debt are going for credit counseling, considering low-interest financial transfers, and applying for personal loans.
- Avoid Reckless Spending
No matter how much you make, you’ll never save enough and meet your financial resolutions if you are reckless in your spending. You have to manage your spending to not only improve your savings but to also get out of debt. The easiest way to avoid reckless spending is monitoring where your money is going every single month. Of course, this means consulting your budget so that you can avoid the unnecessary expenses. The other strategy is to avoid the spendthrifts. You should keep off from people who make you spend unnecessarily and those who don’t contribute positively towards helping you invest.
- Teach Your Kids How to Be Financially Responsible
Your kids can be your worst spenders if you are not careful with their demands. According to Kids & Money Survey, most parents are doing great when it comes to teaching their kids about financial responsibility. If you haven’t been doing it, it’s time you consider it. You should leverage every teachable chance that you get – when you shop, eat, and play – to help them know the importance of saving and why they shouldn’t waste money.
- Set Up an Emergency Fund
A recent survey by Bankrate indicates that only 39% of people are prepared to pay for emergency expenses with their individual savings. it’s worse considering that a majority of them will consider borrowing money to meet unexpected costs. Setting up an emergency fund may be the key to getting out of debt and thus should be considered. You should save in an account that is out of sight so that you don’t contemplate spending unless it’s an emergency case.
- Save Towards College
If your kids are yet to get into college, it’s time you start saving towards their education. You need an education saving plan that will comfortably pay for their higher education. A perfect example is the 529 plan. According to SavingforCollege.com, the plan is better since it allows you to withdraw the money tax-free.
- Revise Your Will
Do you have a will? If you do, it’s time to revise it if it has taken you time since you last did it. Since life is very unpredictable, a will is the only thing that’ll legally safeguard your last wishes. It’ll be able to protect your dependents in the event that you are not there to sound your considerations. How do you plan to share your finances and other assets? You should mention the plan in your will.
- Save Towards Retirement
Lastly, you have to plan for your retirement as early as now. It takes finances to do it. You may consider investing in an IRA (Individual Retirement Plan) that has immediate tax advantages. The money that you save can be used to buy or build a better retirement home once you are done with serving the nation.
Since your finances are key in determining the shape of your future, you have to plan how to put them into better use and how to improve them. The above smart ideas will help you make achievable financial resolutions. Start enforcing them and be able to look forward to a great new year!