If you’re like most people, you start the new year with an intention to be better and do better. Maybe you’d like to lose weight or start your own business. Finances and paying off debt, however, should be at the top of your resolutions list. If your current saving and spending habits are not serving you, 2019 needs to be the year you turn your finances around and learn how to live within your means. All you need is a little dedication and discipline.
Need a car repair or an unexpected medical procedure? These things can cost a lot of money and throw you off course. For this reason, an emergency fund is essential to your financial well being. It can serve as a cushion so you don’t have to rely on credit cards. It is suggested you have at least six months of living expenses saved up. Depending on what your expenses look like, this can seem like an unattainable goal. The key is to get started. If you cut out a few fancy coffees or take-out lunches and put that money toward savings, you’ll be surprised how much extra money you can save!
If you don’t really need something, you may be able to put off purchasing it for a month or longer. After a while, you’ll realize that you’re getting along just fine without it. You’ll probably even find that many of the things you buy on a regular basis are actually luxuries, not necessities. Even for your regular purchases, like household or personal care products, seek out less expensive alternatives, including store brands and sale items.
One major reason people avoid facing their finances is because they don’t feel confident with money. If you know that you lack confidence, ask for help! Chances are you have friends or family members who are savvy with their money. Barter one of your skills or talents in exchange for their assistance. If you don’t feel comfortable asking for help or don’t know anyone who can help, turn to technology. A number of apps today - including Mint and Albert - can help you assess your finances and set a budget.
Some debt is not bad ( a mortgage is a perfect example), except when you are talking about credit card debt. If you are carrying any debt as we enter the new year, make a plan to pay it off. There are different methods to choose from for paying down your debt. Pick one that is right for your financial situation and before you know it, you will be debt free. Just make sure you stick to your budget moving forward so that you don't fall into debt again.
Each year you are entitled to a free credit report. Annualcreditreport.com is a great place to start since it is government mandated. Once you get your report, go through it thoroughly to see if there are any inaccuracies. If you find any, it is crucial you look further into them. If you find that they are indeed not correct, it is time to consider reaching out to a credit repair service. Check out our reviews of the best credit repair companies for how to get started.
This is something that should be done on a yearly basis. You should be carrying insurance for all the essentials. This includes homeowners or rental insurance, health insurance and life insurance (if you have dependents). Most people overlook this one, but disability insurance is also very important. You never know when something can happen that can render you unable to work and pay your bills.
Regardless of your age, you should be contributing to some sort of retirement plan. This could be your work 401K or a Roth IRA (or better yet both). This is by far one of the most important things to review every year to ensure you are on track with your retirement goals. If you find you are not on track, it is time to review your budget and see where you can start saving more. Here are some simple contribution guidelines to go by:
Each year your portfolio is affected by how the market performed. Your balances and investments may look in check but it's important to dig deeper and see if your asset allocation (the money you are putting into bonds, stocks, bonds and cash) is still in keeping with your timeline and goals. If not, make the necessary changes so that you walk into 2019 on the right path. If you don't feel comfortable in managing your investments, it may be time to seek advice from a financial advisor.
Any time you embark on a new year, it is a fresh start. Your finances should always be at the top of your resolutions list no matter what your age. Take an in depth look at everything from your budget to your retirement plan to ensure you are on track with your financial goals. Make changes where necessary and you will feel that much more in control of your financial journey.
Which personal finance resolutions will you be setting in the new year?