New Year’s Financial Resolution
The start of a new year is a great time to make some changes to your lifestyle so that you can be on firmer financial footing. Of course, many people fail to achieve their resolution, particularly weight loss goals. To make things manageable, we will avoid stuffing this article with hard-to-achieve goals that will leave you frustrated.
Instead, we propose small changes that can make a big difference to your bank account. Below, we offer some simple financial resolutions.
Identify What You Spend Money On
Before you can save money, you need some idea of what you are currently spending your paycheck on. Chances are you have no real idea. In 2019, commit to finding out.
There are several strategies you can use:
- Keep a journal. Every time you purchase something, write it down. This method is too cumbersome for most people, and it is easy to forget to enter a purchase.
- Buy everything with a debit or credit card for one month. At the end of the money, identify where you are spending money. This is an easy method, but some purchases might have to be in cash, so save receipts.
- Use a money tracking app. Top choices include Empower and Clarity Money.
Once you identify what you are spending money on, you can find easy ways to save. For example, instead of eating out several times a week, make meals at home. This can be a fun activity for the family that helps you realize big savings at the same time. You can also cancel that gym membership and exercise outside, which saves money and should make you feel better.
Prioritize Your Debts
You might be making the minimum payments each month on your debts. But if you can save a little money—even $100 a month—you can contribute the extra to debt repayment and get them paid off faster.
Sit down and write out a list of all your debts. Also include the monthly payment and the interest rate. Typically, you will pay off debts much faster if you contribute extra income to the debt with the highest APR. If that debt is huge, however, you can build momentum by trying to pay off the smallest debt first and moving up from there.
Save for the Future
No matter your current financial situation, you need to begin thinking about the future. Put away a little money each pay period so that you have something in place in the event of emergencies. Generally, people need at least 6 months of expenses saved in the event of a health crisis, sudden job loss, or other unexpected expense.
Start small and don’t get frustrated. Even $50 set aside is better than nothing. If you suddenly come into some money, such as a tax refund, put it in your emergency fund. Don’t spend it.
If you already have an emergency fund, begin planning for retirement. You can open an Individual Retirement Account (IRA) online with a few clicks of the mouse. Also check if your employer has a 401K plan and whether they match contributions, which would be a benefit you really want to take advantage of.
Here’s to a Financially Successful 2019
Nowack & Olson is a leading bankruptcy law firm, helping the South Florida community achieve its financial goals. If you are overwhelmed with debt, you should take advantage of the options available, including filing a possible bankruptcy.
We are happy to discuss your options, so please call 888-813-4737 to schedule a free initial consultation.