5 Financial New Year’s Resolutions Everyone Should Have
Now that another year is coming to a close, you’re likely thinking about how you can improve your finances. If you didn’t meet your financial goals for this year, don’t feel bad. A recent Fidelity study found that roughly 34% of survey participants didn’t come close to achieving their 2015 goals. The good news is, you can try again next year. This is a great time to take financial inventory so you can make needed corrections. Here are some financial resolutions you should make this New Year.
1. Tackle debt
If you racked up holiday debt and debt from overspending throughout the year, take this time to draft an action plan for how you can get a handle on your finances. Sit down and make a list of ways you can either cut back on spending or earn more money. If you have a friend who has successfully paid down debt, team up and ask him or her to be your “money buddy” and serve as your support system.
2. Update or make an estate plan
Whether you like it or not, one day you will die. That’s why you need to have a plan for what will happen to your assets in the event of your demise. Your estate plan should include a will, power of attorney, and health care directives. Also make sure to update beneficiaries for retirement and bank accounts. Another important step is to review your life insurance policy to make sure it still fits your current circumstances.
3. Revise or make a budget
If you don’t have a budget, now is the time to get one. If you don’t like the word “budget,” call it a spending plan. Assigning a different name can motivate you to stick with the process and remove any negative feelings you may attach to managing money. Make sure your budget is neither too restrictive nor too loose. Also allow room in your budget for some “extras” like a new book, drinks with friends, or a new article of clothing. Whatever that something extra is, don’t overdo it.
4. Manage credit
Take advantage of the free credit reports that are available to consumers every 12 months. You can order one free copy of your credit report from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) when you visit annualcreditreport.com. Keeping track of your credit can help you spot errors or suspicious activity earlier. Also contact your credit card issuers to see if you can negotiate a lower monthly interest rate. This could help you pay down your debt faster. A report conducted by CreditCards.com found that two out of three consumers who request a lower rate are granted their request.
5. Boost or start an emergency savings fund
A financial emergency can strike at any time, so it is in your best interest to be prepared. Most financial experts recommend setting aside roughly 10% of each paycheck for savings. This way, you won’t have to rely on credit to help bridge the gap during a financial crisis.
Forgive yourself if you fail
While this isn’t a financial resolution, it’s important to remember not to punish yourself if you miss your goal. Allow yourself to fail from time to time. The most important part is that you keep trying. It likely took you several months (or years) to get into debt, so remember that getting out may take twice as long. Be patient and be kind to yourself during this process. Continue to stay focused on your goals for this year and take it one day at a time.