Do you have any financial New Year’s resolutions? It’s possible that most of them are on the verge of being broken already.
But, your finances are one aspect of your life that you can’t afford to overlook this year. You not only need to keep your financial resolutions intact but also ensure that they are simple enough to easily follow throughout the year.
Here are 6 smart and simple financial New Year’s resolutions that you can actually keep to realize your financial goals
Set up a Plan for Paying off Your Debts
Paying off your debts should be your most important New Year’s resolutions. In order to realize this goal, you need to set up and follow a smart payback plan.
Calculate the total amount of debt that you need to pay in the year, which should include the total amount you owe through your credit cards and loans. Then, identify the debt which carries the maximum interest and pay more than its minimum monthly payment amount, while continuing to pay the minimum monthly amount on other debts.
Continue this strategy until the highest debt is completely paid, and then repeat the process with the next highest debt and then subsequent debts.
This smart strategy has been tested and recommended by financial experts and proven more cost-effective than simply paying the minimum debt amount every month.
Save a Little Amount Every Month
To meet your financial goals in the New Year, saving should be an integral part of your New Year’s resolutions. You should begin saving for retirement as soon as you join a workforce. It doesn’t have to be half of your monthly paycheck, but putting aside a small amount from the beginning will leave you with a good amount of cash after retirement.
In order to meet other financial goals, such as saving for the down payment on a home loan, auto loan or for vacations, it’s important that you have dedicated saving plans in the process.
First, calculate the amount you need to save every month to meet all financial goals, and then automate your savings through your bank account or payroll deduction.
This will ensure you reach your financial goals early enough by making some actual saving rather than saving on and off.
Investing wisely will help you reach your financial goals while minimizing the investment costs. It’s safer to allocate your long-term investments in a diversified portfolio.
While investing for a period of 5 years or more, a smart allocation will not only help you earn maximum interest but also cushion the invested value against inflation rate fluctuations.
Divide your investments among stocks, bonds, and cash. The percentage of allocation depends on your risk-aptitude. If you have already earned a substantial amount of return on your investments, it’s wise to put it aside in IRA or a 401k to let it grow further.
Chart a Savings Plan for You and Your Family
Make a well-charted plan to meet you and your family’s financial needs. This could include saving for your retirement or setting aside money for your child’s college education.
Saving through your employer’s retirement plan, an IRA, an Education Savings Account, or US Government Savings Bonds can help your family save for rainy days while saving you taxes as well.
Make S.M.A.R.T. Financial Goals
S.M.A.R.T. financial goals should be specific, measurable, achievable, realistic, and time-bound. Make sure all your financial goals are realistic and easy to achieve.
Investing a large amount could drive you off-track from meeting your financial needs while investing in shorter amounts could lead you astray from your financial goals.
Review Your Financial Progress Regularly
Keep an eye on the progress of your financial goals every quarter. Review your credit report and take steps to improve it. Revisit your financial goals and revise some goals if needed. Adjust your goals and plans according to any changes in tax laws, inflation rate, and market fluctuations.
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When you break down your financial goals into simple steps, it makes achieving your financial goals a whole lot easier. Set aside some time to put these resolutions into practice and make sure you stick to them. A little effort at the beginning of the year will yield tremendous benefits at the end of the year.
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