New year, new you! The start of a new year is an excellent opportunity to reflect on our past and future goals. If you’re still creating a list of New Year’s resolutions, think about including a few financial-related objectives. Many financial institutions have great promos and offer as the year starts, such as Chase’s sign-up bonus. Although setting a budget and saving money are excellent objectives, your financial resolutions don’t have to end there!
We’re outlining ten intelligent and dynamic financial New Year’s resolutions in this guide, as there is a goal for everyone. It is important to set SMART goals. If this is your first time hearing this term, it means that your goals must be:
- S – Specific
- M – Measurable
- A – Attainable
- R – Relevant
- T – Time-bounded
Follow your Budget
Making a spending plan is known as budgeting, New Year’s resolutions, and the said plan is called a budget. By making this spending plan, you can anticipate whether you will have sufficient money to do the tasks you need or want to complete. Also, it helps to avoid overspending because a budget can help you keep track of your income and expenses.
There are a lot of applications and software available for creating a budget. Suppose you’re unsure of the proper placement of those numbers. In that case, financial gurus frequently advise adhering to the 50/30/20 budget rule: set aside 50% of your income for necessities, 30% for wants, and 20% for savings and debt repayment.
Doing this can easily predict which months you might struggle with money and which ones you’ll have extra. So that things are easier to handle and more enjoyable, you can seek strategies to balance out the ups and downs in your money.
Emergency Fund
Should you pay off debt or start an emergency fund first? Although you’ll find some conflicting advice online, most financial gurus advise creating a fundamental emergency fund before you start working on any other financial goals. Of course, you’ll still need to make the minimum monthly payment to avoid defaulting on any loans or credit cards.
Start with a more straightforward goal of accumulating one month’s living expenses. After you achieve that objective, make a second aim to save enough money for three months. Ideally, it would be best if you eventually reached a savings level of six months’ worth of expenses.
Keeping an emergency fund liquid is very important. But if you’ve saved a respectable sum, transferring part of your funds to a short-term investment account can be a good idea. Your savings will increase more quickly if you do this.
Be Debt-free
If you’re currently having financial trouble, you shouldn’t feel alone. More than 60% of Americans own credit cards, and we owe $17 billion. You can also owe money on other types of debt, like personal loans and student loans.
We want to eliminate debt as quickly as feasible because it often appears as a heavy cloud over our heads. But when we owe a lot of money, it might be difficult not to feel overwhelmed.
The first step is to remove the bandage and determine how much debt you actually have. After that, you can devise a plan for paying off your debt. The snowball method is one of the most popular strategies used. It focuses on paying down the account with the lowest amount or balance before moving on to the next while making the minimum payment on each account.
Invest!
It’s appropriate to start investing if you’ve amassed an emergency fund and are making good progress toward debt repayment. Yes, keeping your emergency fund visible can make you feel safer. The interest rates on the majority of savings accounts, however, are not high enough to keep up with inflation. The secret to truly putting your money to work is investing.
Your long-term financial objectives and how risk-averse or aggressive you are will determine much of your investment strategy. You can create a portfolio with the help of a financial counselor, or you can register for a customer investment platform.
Conclusion
2022 was a challenging year for many people as soaring inflation and a declining stock market negatively impacted many people’s personal finances. Fortunately, the new year is still in its beginning chapter, and many individuals are thinking about alternatives and making resolutions to get their finances in better shape in 2023. What’s left is taking your first step in making your solutions a reality.
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