New Year’s resolutions come and go each year, with most individuals failing to hit the mark on what they hope to accomplish over a 12-month period. With the end of the year coming quickly, honing in on a single, specific goal like improving financial management may prove beneficial in achieving something worthwhile next year. Boosting personal finance know-how and your overall financial position over the course of one year can seem like a task too steep to tackle. But if you know where to start and what to put your energy toward, a different, better financial you is on the horizon for the upcoming year. Here’s how to get started.
The very first step in improving your financial position is education. Regardless of your background, your job, or your income level, financial literacy is required if you want to make a change in your financial life moving forward. There are several resources online that can give you an easy-to-digest education about how to create a simple financial plan, how to control spending, and how to save – all staples in personal financial management. Asking friends, family, and co-workers about their financial habits, successes, or failures can also be a powerful way to learn more about money without being overwhelmed.
Tackle the Budget
When most people think of budgeting, their mind quickly envisions a grueling process of stressing over spreadsheets, receipts, and account balances. The trust is that the process of budgeting isn’t all that complicated, and it is a necessary component of sound financial management. Creating a budget starts with understanding the amount of income coming in less the amount of spending going out. From there, you can determine which categories may be derailing your spending each month and create limits on those categories for the next month. The budgeting process is ongoing, but once you get in the groove, it’s simple to keep track. If you’re struggling with this important step, know there are several digital tools that can help you establish and monitor your budget, at little to no cost.
Create a Plan for Debt
Debt is a major source of contention for millions of consumers, but in the new year, having a plan to chip away at amounts owed is a smart move. Debt can come in a variety of forms, from local lenders that offer shorter-term secured loans, to large financial institutions where you may have a credit card, or two. To be as efficient as possible in getting out from under the burden of debt, start by evaluating your budget to see what you can afford to pay each month toward credit accounts. Any excess should be used to pay down the highest interest rate balances first. Keep track of your progress each month, and don’t forget to steer clear of adding to debt when possible.
Save for the Future
Most individuals working to improve their financial lives focus on immediate-term objectives, like creating a budget and paying off debt. While these are important, it is also necessary to look ahead to your future financial self. Setting money aside for the long-term is beneficial in personal financial management, as these funds can be used instead of often costly debt to pay for expenses that aren’t planned. You may also consider pumping more into a long-term retirement savings vehicle to help set yourself up for success down the road. Find a few extra dollars in your budget to save, and your future self will thank you in the end.