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5 Attainable Financial New Year’s Resolutions
Every year millions of people make a financial New Year’s resolutions having to do with improving finances, to get out of debt, or basically anything related to getting their financial act together. Yet not long after the new year, our plans fall flat. Most people give up, forget about it or just think that it is too hard and that they will never be able achieve them.
Improving your financial situation is not an easy thing to accomplish. It takes hard work and perseverance. You can not expect things to change overnight. But the good news is, that it can be done and you will be so much happier once you reach your goal.
The key to staying on track with your resolution to improve your financial situation is to set small manageable goals. By doing this, you are much more likely to stay on track and eventually get to where you want to be and have the best financial future possible.
I have put together some small manageable steps that are not too overwhelming. Tackle each of these goals one at a time and before you know it you will be in the best financial shape ever.
Create a Budget You Can Live With
Having a budget is the key to your financial stability. Many people do not like to budget, it is not fun but it is necessary to be financially stable.Budgeting is necessary for you to keep track of where your money is going and is a must in helping you get out of debt and save for the future.
The key to a successful budget is to create one you can live. The reason so many people fail at budgeting is that they create a budget that is unattainable, where every single penny is accounted for. That’s just not realistic.
When you don’t have a penny to spare for unexpected expenses, you are bound to fail. You need to give yourself some wiggle room in your budget. Things pop up all the time that might require extra money; maybe you forgot about a birthday that is coming up or were hit with an increase in you cable rate.
These small extra expenses can cause you to fail at budgeting. If you give yourself a bit of padding in your budget, you are much more likely to stick to it. Of course you can strive to keep that strict budget but at if something unexpected does happen, you’ll be prepared for it.
Create a Debt Repayment Plan
Getting out of debt needs to be a priority. If you have debt, this should be a major focus for you right now. You need to create a debt repayment plan and work this into your budget.
You can choose to use the debt snowball plan where you concentrate on paying the lowest debt first until it’s paid off then jump on the next lowest; and so on. Or you can use the debt avalanche method where you work on paying the highest interest rate debt first and then the next.
Although, the debt avalanche method is great because in the end you end up paying less interest; I recommend the Debt Snowball because you see results faster which is encouraging and will help you stay on track with your plan.
It doesn’t really matter what type of debt repayment plan you choose. As long as you pick one, make a plan of action and follow through until you debt is gone.
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Build an Emergency Savings
If you don’t have an emergency saving fund, then it’s just a matter of time before something happens that could send you finances into a tailspin. Just think about it, let’s just say that your car breaks down tomorrow. How will you find the funds to pay for the repairs?
Of course you will blow your budget out of the water and most likely get into debt (or add onto it) because you haven’t prepared for these unexpected expenses. Building an emergency savings needs to be built into your budget so you have a plan to make regular contributions to grow you savings.
Start off with a goal to reach at least $1000 in emergency savings. An emergency savings is a must for you to stay on track with your budget and debt repayment plan. If an unexpected expense arises you will be able to deal with it. Once you are in a better place financially, your next goal should be to build up that emergency savings to at least 3 months or more worth of living expenses.
Automate Your Payments
Paying bills late can cost you a lot money in late fees, finance charges and interest. It not only affects that one bill you forgot to pay but it can affect your overall finances. Paying late will have an impact on your credit score, which could increase your interest rates on multiple accounts.
This will in turn, will impact your budget and debt repayment plan. See how each of these financial resolutions pretty much go hand in hand together.
Automating your payments is one of the easiest ways to avoid this costly mistake. It is also one of the easiest tasks to complete in your journey to financial stability. Simply set up auto pay for every single regular monthly expense you have. Once this is set up, you might want to create calendar alerts to remind you of any upcoming bill to make sure you have enough money in your account to cover it. Overdraft charges are just as bad as late payments so make sure keep an eye on this.
Improve Your Credit Score
Just like paying bills late, improving your credit score will have an impact on your total financial health but in a positive way. Having a good credit score will save you money on interest rates, insurance premiums and more. Working on improving your credit score may seem impossible when you are in debt.
The key to improving your credit is knowing what makes up your credit score and how each factor affects your credit worthiness. I wrote a full tutorial on this you can check it out here.
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Plan For The Future
Reaching your ultimate goal of having a bright financial future may seem like it’s impossible and so far away. You will need to be strong and you will have to put work into it, but the end result will be so worth the effort.
All the above steps will set the stage for achieving your ultimate goals. Tackle each one of these small manageable goals and before you know it, you WILL see the light at the end of the tunnel and have a bright financial future!!
I’d love to hear what financial goals you are working on and how you are doing. Please leave a comment to share.
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