Did you know that one of the most common New Year’s Resolutions people make, alongside eating healthier and working out, is to improve their financial management skills?
The interesting thing about this is that unlike getting in shape— which requires increased energy exertion and careful calculation of intake—managing your own financial state can be done with simple planning and attention.
Don’t get me wrong, it does require effort, but with the proper knowledge and application, you can achieve almost any financial goal you make for yourself. If you are one of those New Year goal-setters looking for some guidance, review these tips to help get you back on track and set yourself up for a successful financial future.
Organize Your Finances
The first step to improving your financial state and management skills is to determine a schedule that works best for you.
It’s important that you set aside time regularly to review your accounts, pay your bills, and ensure everything is taken care of. Getting into this habit is beneficial as it not only keeps you in check with your bills, but it allows you to catch any discrepancies or mischarges that need to be addressed.
Whether you decide to do this early in the morning as you drink your coffee and prepare for the week ahead, or on a Sunday evening as you wind down an activity-filled weekend, make sure you’re reviewing your finances on a weekly basis.
Create a Budget
Money is a very personal subject as everyone has a different approach to saving and spending based on their lifestyle. Even if you are not struggling with your finances at the moment, creating a budget is a valuable practice for everyone as it allows you more freedom and flexibility.
There are various ways to create a budget that works for you, allowing you to live the life you desire while being able to save for any purchases and expenses in your near future. When starting to budget, it’s critical to stick it out for the first few months even if it’s difficult. Although you might have to make some small sacrifices in the beginning, in time you will gain a better sense of money management and can allow yourself more flexibility in spending down the road.
Destroy Your Debt
Debt is a major issue for many families and individuals, which can lead to more problems than anticipated. Financial issues are one of the main reasons why couples get a divorce which is extremely troubling, yet it is an avoidable situation. If approached correctly from the start, managing your finances on your own or as a couple can be relatively straight forward and painless. If handled poorly, you risk running into serious issues with credit cards and debt.
When you’re spending money you don’t already have, that is the first issue that should be addressed. You might even want to consider holding off credit card use until you have your finances in a better state.
If you decided it’s time to make a plan to pay off your existing debt, you’re moving in the right direction. Debt will weigh on you and prevent you from doing the things you want to do without additional stress. The longer you avoid the issue the worse it can become, so talking initiative now is one of the best things you can do for yourself in the long run.
Apply for Life Insurance
If you’re a young professional, a new parent or an individual looking to put yourself in the best place possible financially, it might be time to consider setting up a life insurance policy that aligns with your budget and meets your needs.
It’s easy to put this off until later in life, but in doing so you risk running into a worst-case scenario without any coverage.
Should anything happen to you or your spouse, it’s important that you’ve taken the proper steps financially to help you recover financially and ensure your loved ones are protected to the best of your ability. If you’re looking for some guidance in this department, a professional agent can review the options available and help you determine what type of coverage will benefit your family’s particular situation.
Outline Your Needs and Wants
If you find yourself struggling with money management and constantly spending on things you don’t need, which leaves you feeling strapped because you already spent last week’s paycheck—this one is for you.
Try making a list of all your needs and wants, including any major purchases that you intend to make that could potentially put a dent in your bank account.
Taking the time to determine what these are and how much money you need helps you gain a better sense of financial responsibility and can help motivate you to start intentionally saving money.
Define your “why” and think about how this product or service will enhance or benefit your life before purchasing. Obviously, your needs are to be met first, so you can implement those into your budget first, then work through your list of wants.
Create an Emergency Fund
You’re correct—there is a theme going on here—and it’s all based around planning and preparing for the future. Yes, living in the moment will allow you to live a joyous and free life, but in order to do that, you must also maintain a security blanket.
Life is unpredictable and although you might be able to afford your car, house, and vacations now, you never know what unexpected circumstance can throw you off track. Should you need money for surgery, an illness, helping a family member in need, or an expensive repair, you will want to have somewhere to financially draw from.
Setting aside some money for an emergency fund is a great way to secure your finances just in case. Hopefully, you’ve been fortunate enough not to need this fund, but should something come up, being prepared can save you from serious debt and financial issues that would be hard to recover from.
Being more intentional with your finances will require some attention and persistence at the beginning, but over time you will get comfortable making decisions that will serve you in the future. The better handle you have on your financial state, the easier it will be for you to make adjustments, save for major purchases, and live a life without the constant stress of money—definitely a worthwhile expenditure while sticking to your new year’s resolution.