The New Year is a perfect time to overhaul your life. The first place to start is making financial resolutions that can get you closer to your monetary goals. It’s easy to make resolutions, but not so easy to keep them. This is true for all resolutions, but especially financial ones. The key for all resolutions is to set achievable, actionable goals. Don’t be ambiguous and don’t aim too high. So, if getting your financial life in order is a resolution you would like to make this year, here are a few you might consider adding to your 2019 itinerary.
Prioritize Your Debts
Did you know that not all debt is created equal? Make a list of all your financial obligations and organize them by the interest rates. Debt with the highest rates (most likely your credit card debt) should be paid off immediately. It does no good to invest funds while you are paying 19 percent or more in interest each year.
I suggest putting all this financial information into a spreadsheet. I want to warn you though, this can be a frightening activity for most people. It’s like weighing yourself when you know you have over eaten. Nevertheless, it’s critical in establishing your plan to rid yourself of unnecessary debt. I suggest having a cocktail or two before you determine your grand total.
Once you have all of the debt and interest rates established, then select the best repayment approach for you. Some people prefer paying the smallest debts first while others like to pay the highest interest rate debt first. Select the option that works best for you.
Save 15% or More of Your Gross Income Most people say they want to save more, but don’t know how much they should save or where they should save it. The best way to be a successful saver and achieve this goal is to set up an automatic transfer from your checking account to your savings account for the same amount every month. If you find you need some of that money in the future you can always transfer it back.
Go on a Cash Diet
If you spent a great deal of money on your friends and family this holiday season and your credit cards begin to bulge, then my suggestion is you go on a cash diet for the next six months. Limit your spending to a certain amount of money every week and see if you can live off that amount. Being conscious of your money and the way you spend it is the first step in becoming financially healthy.
When I say a cash diet, I mean actually paying for items with cash. Swiping your debit or credit card shuts down our brains and we don’t even think about what we are buying. It’s like it isn’t happening. When you make a cash payment, you are forced to keep your brain connected. I believe a cash diet is a great way to keep your spending under control.
Collect Loose Change
Start a piggy bank for adults. Every time you pay cash for something and they give you pocket change, go home and throw it into a container. If you do this over the course of a year, you have the potential of saving several thousand dollars.
Knowledge is Power
If you want to learn to do something you read a “how to” book or ask someone to show you. Reading financial books can put you in touch with ideas you can utilize in your own financial life. By reading “The Intelligent Investor” or other financial periodicals you can pick up on ideas, philosophies and techniques of the most talented minds in the financial circles. Committing yourself to educating yourself about financial health is essential to creating your long-term wealth.