At the beginning of each New Year it is customary for many individuals to take stock of their lives and make resolutions for positive change. Some of the more popular goals are to lose weight, exercise more, and adopt a healthier eating plan. Another very popular resolution many resolve to keep involves personal finances.
Resolutions surrounding saving more and spending less are high on the list, however, if there is no specific plan to achieve the sought after goal of better financial health the resolution is apt to be abandoned as a failure.
Steps to take in order to improve financial health:
Keep accurate records
It is difficult to discern where spending can be cut if one does not keep an accurate record of expenditures. Spend the first month of the New Year recording every dime spent. Review your record and you will quickly see the difference between necessities and wasteful spending. Analyze your record and see where you can economize. Maybe you are eating out too much or making frivolous purchases and have been previously unaware of these spending habits and how they add up.
Pay yourself first
Establish two savings accounts; one for emergencies and one for long-term savings. In the beginning, make the emergency account your priority, for it is often financial emergencies that wreak havoc with the budget and make finances spiral out of control. Once you have a solid amount in your emergency savings, focus on adding to long-term savings with a consistent percentage of your paycheck each payday. Even ten percent of your net income will add up over time and increase financial security.
Put credit cards away
Living on credit actually eats away at your real income in the form of interest and fees. Resolve to live on a cash basis and put any extra monies earned or garnered as gifts into paying off credit card balances. Once you have achieved zero balances, resolve to only charge an amount you can pay in full each month to avoid incurring any interest.
Cultivate the virture of frugality
Don’t live beyond your means or even within your means. Strive to live below your means so that you are not surviving paycheck to paycheck. Each time you opt to forego a luxury and put the money you would have spent into your savings you are increasing your financial health. On way to encourage a frugal spirit is to envision how you wish to be living in the future. Retirement seems very far away when you are in the midst of your busiest productive years, but time has a way of slipping away faster than one realizes.
Save the environment and save for yourself
Ensure you do not fall into the trap of the modern ‘throw away” mentality. Fall back on the old adages, “Waste not, want not – make do, do without, use it up, wear it out.” One way to be financially healthy is to value and preserve what you have in the present.
Shop for services and do not hesitate to make a change
Service providers are competitive in courting your business. Whether it is your bank account, a car loan or cell phone service, stay updated with incentive offers and make a change if it will impact your finances in a positive way.
There are so many ways to be proactive with spending and saving. These are just a few of the myriad ways to make small changes in your habits that will have a huge impact on your financial health. If you build only one of these into your New Year’s resolutions and follow through you will come out ahead financially and increase your personal monetary security in the coming year.