You’re well into the New Year. Your resolutions may be long forgotten. When it comes to making a financial resolution, any time is a good time! You can make plans at the beginning of a calendar year or create your individual fiscal year. Knowing where you are financially and putting a plan in place can help you be in a better spot at the end of the year than you were at the beginning.
An article on Bankrate gives some financial resolutions or goals to help in your journey to a better financial place. Expert tips can help you accomplish your plan.
1. Pay Down Credit Card Debt
Paying interest on your credit cards costs you unnecessarily. During 2020 might be the best time to deal with your debt. Choose the avalanche method, where you pay off the highest debt first, or the snowball method, paying off the smallest debt first, to gain control over your credit card debt.
Struggling just to make payments? Consider credit counseling, a low-interest balance transfer, a personal loan or debt settlement.
2. Start an Emergency Fund
“Nearly 70 percent of Americans have less than $1,000 in a savings account,” according to a survey reported on GoBankingRates.com. The following chart shows the small amounts Americans have in their savings accounts.
Bruce McClary, spokesman for the National Foundation for Credit Counseling, which conducts this annual survey said, “It’s puzzling to me that if the economy is doing so well and that we’re so close to full employment, that consumer confidence is up … that we haven’t seen the numbers move much in people’s ability to save.”
Money in an emergency fund can keep you from going into debt to cover surprise costs. You can start small, having money automatically transferred from your paycheck or checking account into a savings account. Keep adding to it throughout the year. With the money in a savings account, you’ll be less likely to spend it.
3. Boost Your Retirement Savings
A good place to start is with your 401(k) at work. Many employers will match your contributions up to a certain percentage.
If your company doesn’t offer a plan or you’re self-employed, consider opening an IRA (individual retirement account) and make automatic contributions. Take advantage of any tax deduction your contribution may have. Realize that some limitations may apply.
See related article here.
4. Invest More
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5. Improve Your Credit Score
FICO is the score most commonly used by lenders. Ranging from 300 to 850, a score above 700 is considered “Good” and anything over 760 is “Excellent.” Average for Americans just hit an all-time high at around 705, depending on the report you read.
Your score determines whether you get the financing and financial services you need, the interest rate you’ll pay on a loan and in some states, your car insurance rates. How can you improve your credit score?
Jim Wang from Wallet Hacks says, “On-time payments, reducing your debt and making sure you’re careful about how often you apply for credit can help you improve your score. Simple steps can make a big difference.”
6. Reduce Your Student Loans
Student loans hanging over your head can keep you from reaching other goals. This next year, you can pay them off completely or at least put a dent in them.
Mike Crawford from Fifth Third Bank says to start by reviewing your loan interest rates. “Prioritize the loans with the highest interest rates and pay extra on these accounts. That way you will save more in interest.”
You can also consider consolidating your loans to get a lower interest rate and a monthly payment you can live with.
7. Cook More at Home
Eating out costs a lot more than cooking at home. It is also healthier. Wallet Hacks’ Wang also points out, “The healthy aspect of cooking at home saves your money on healthcare costs, and you also save money on food for your family.”
The money you save by cooking and eating at home could go into your emergency savings fund, paying down your debt or investing more.
Taking time to set financial goals or resolutions can help you live your life better. It can set you up to be in a better place financially by this time next year.
Paying down your debt, looking for ways to save for retirement, and putting money you save into investing are things you can begin doing now. All of this will help you in your future.
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