Five Financial New Year’s Resolutions to Think About Today
Here are 5 suggestions that you may want to consider implementing in 2011. Now is the time to get control of your finances, and take that first step down the path to financial fitness. Why not start this next year off on the right financial foot?
1. Spend less than you make.
Just like you can’t lose weight if you take in more calories than you burn… you can’t save money if you spend more than you bring in. Spending less than you make on a consistent basis is the key to reaching financial stability. You can’t increase your savings, make investments, or even make wise spending decisions if you’re consistently overspending your income each month. Put together a spending plan and make it one that works for you and your family!
For a step-by-step process of how to make an effective spending plan, go to www.ConsolidatedCredit.org and click on theDebt Learning Center. There you will find our Budgeting Made Easy booklet that you may download free of charge. This publication walks you through the process of wise money management and explains he reason behind each step, in an easy to understand way.
2. Save more… at least 10% of your income.
Ever hear of the theory of paying yourself first? That’s basically what this is. If you make it a habit to pull out 10% for savings and investments for retirement, before you pay any other bills, you are actively working towards a better financial future for yourself. This 10% can include your 401k account if you have one, but be sure you are maximizing that option! It’s also wise to put an additional amount into savings after your 401k investment is made. Put this money into a money market account, money market fund or CD if possible, so that you get a higher interest rate.
3. Calculate your net worth.
Do a reality check to ensure you are on the right track. Your net worth should be increasing each year, even if it is just by a small amount. The exercise of calculating your net worth can be very valuable as well… people often discover accounts, investments, etc that they have forgotten about, or need to update. If your net worth has decreased from the year before, take an honest candid look at where you can make adjustments to improve these numbers.
4. Start an emergency fund.
If you don’t already have an emergency fund, start one today! Your emergency fund should have a minimum of 3 months worth of expenses in it. This is your emergency money for a job loss, emergency repair, medical expense, etc. Keep these funds in a money market account or other high interest, easily accessible account. If ever you have the misfortune of an unexpected job loss, unexpected car repair, unexpected appliance problem… you will be far more prepared to weather the storm if you know you have a little breathing room on your finances, thanks to your emergency fund! That peace of mind makes all the difference.
5. Make sure you have adequate insurance.
We’re talking home, life, disability, health, property and even auto. Make sure that you, and your family, are covered adequately!
Take advantage of the New Year and get on the path to financial fitness!