A new year can be a new beginning. We might make promises to ourselves to break bad habits, but how many of those New Year’s resolutions actually stick? When it comes to financial security, the biggest step is just getting started.
To make one New Year’s resolution that can pay off beyond 2017, there are a few practical steps that can help to improve your financial picture in the short and long term.
Here are 15 ideas to get started on the changes you can make that will add up:
- Consolidate your loans
Interest rates might be low right now, but they won’t be forever. Consider consolidating several smaller loans into a single loan at today’s low interest rates. Read the fine print carefully. Remember: “the large print giveth, the small print taketh away”.
- Pay off some of that credit card debt
The average family has nearly $15,950 in credit card debt. Paying just the 4% minimum on that at an 18.9% interest rate means making payments for the next 16 years. Continuing to pay the initial monthly minimum of $638 on that amount means your debt will be wiped out in less than 3 years - always pay more than the minimum if you can.
- Contribute to your workplace savings plan
Do you know how much money you’ll need for retirement? First, find out. Then, boost your savings. Whether it’s a 401(k), a 403(b) or some other employer-sponsored plan, take advantage of the tax breaks offered. Remember, never pass up free money if your company matches your contribution.
- Cut some of your bills
Do you really need those extra sports channels? Do you still have a landline? Cable TV? The daily latte? Think about what you pay for each month, and consider what you can cut out. Finding $20 to cut each week, invested at 7%, results in more than $6,200 in savings; stretch that out over 25 years, and it’s more than $70,000. Make a game of it with your family – can you find $20 each week?
- Refinance your loans for things you can’t cut
Look into refinancing your loans to see if you can get a better interest rate. Your credit score may be better now than it was when you took out the loan, which would lower your rates.
- Treat your savings as an expense
Each month, you have all these expenses – housing, food, utilities, debt, entertainment, etc. – and at the very end of the line… is you. Saving money is a way to move yourself to the FRONT of the line. Pay yourself first – before the cable bill, before the cell phone bill. Aren’t you worth more than any of those?
Budget for how much you would like to save each month, and consider it a monthly expense. The money can often be pulled straight out of your paycheck or swept from your checking account, so it’s gone before you get a chance to spend it.
- Start as soon as you can
Compound interest is your friend. Start saving as soon as you can and remember, any amount is better than none at all. Small dollars, invested consistently, and given time, will generate huge rewards.
- Create an emergency fund
From unexpected home repairs to a safety net if you lose your job, an emergency fund is crucial. Start by aiming towards three months of your salary. Once you have that money, don’t touch it unless you have to. The peace of mind is worth it. And no – dropping your cell phone in the sink is not an emergency.
- Invest in learning
You can keep your earning potential growing by building your strengths, knowledge and skills. Invest in continuing education, training and development courses or certifications. Many employers help cover these expenses, check with your company to see if this is something offered.
- Invest in your health
A lot of people resolve to hit the gym more often at the New Year to slim down their waist line. But investing in better health also can fatten your pocket book. Your health is your most important investment and healthcare costs are continuing to rise. Longevity, fewer medical bills and increased energy are the returns.
- Take care of your belongings
From basic car maintenance to preventing frozen pipes, routine upkeep saves you money in the long run by helping prevent disasters.
- Live simply
Rethink the items you’re purchasing, or even come up with a way of categorizing them. Try using a 1-2-3 prioritizing system by assigning numbers to things and then budgeting appropriately. 1- items you need to purchase right now (groceries, gas, etc.) 2- items you need, but not immediately (new bedding, a new winter coat, etc.) 3- items you do not need but would like to have (new TV, home décor, etc.) The delayed gratification that comes from putting off those “like to” purchases until other priorities makes the purchase feel that much better.
- Give when you can
Contributing back to the community makes more of a difference than you might realize towards your own financial security. Donating money or your time to a charitable cause helps strengthen the economy, which directly affects you.
- Ask for a raise
This just might be the easiest way to become more financially secure this year. If you feel you have grounds to ask for a raise, then do so. Research your company’s pay practice and your job’s worth and present your findings to your manager.
- Increase your income
Even if you’re unable to get a raise or put more money away each month, there’s always a way to make more. Whether it’s hosting a garage sale, asking for more hours at work, or even pet sitting. Where there’s a will, there’s a way.