Have you been sticking to your New Year’s resolutions? Healthy habits and lifestyle changes are the most common resolutions to make the list. However, personal finance resolutions are just as important. If you’ve missed out on listing clear actionable steps to improve your finances, here are some you can include into your resolution!
1. Having clear financial goals
Having clear financial goals is key to being financially savvy. After all, your spending and saving habits only make sense if you know what goals you’re working towards. Instead of wanting to “save more”, “spend less”, or to “invest more”, you should quantify your financial goals. For example:
- Save $X by the end of the year
- Get and insurance plan that covers daily accidents
- Earn $X passive income by the end of the year
2. Deal with your debts
We know — it’s not easy to stare at your debts in the face. But what needs to be done, still needs to be done. Not dealing with your debt will only create more problems for you in the long term, so getting started on it as quickly as you can is ideal.
Since we’re still feeling pumped about New Year New Me, now’s a great time to ride on that adrenaline and list out all your debts in order. Don’t miss out on any details! In general, there are two ways of paying off your debts — the snowball method and the avalanche method.
The snowball method is great for those who want to tackle one debt at a time. Start with your smallest debts and then, work your way up. If you prefer to tackle the biggest debts first, you can use the avalanche method. List down all your debts in order of interest rates and then, tackle the one with the highest interests first!
3. Track your expenses
You must’ve heard of how important it is to track your finances. In fact, you’ve probably heard it so many times it’s become a bit of a bore. But here’s the question — do you really keep track of your expenses? And if you do, do you set smart goals to achieve them?
Tracking your expenses isn’t just about spending within your means or your budget. It’s also about spending in a way which allows you to reach your financial goals. When you’re tracking your finances, think about what financial goals you want to achieve this year — is it growing your savings? Building up your investment portfolio? Being sufficiently covered by your insurance plans?
Being clear about your financial goals is vital. There’s no point in simply tracking your expenses if it doesn’t lead to better financial health!
There are many handy apps you can download in your smartphones today to help you with your spending. Some apps you can check out include Pocket Expense, Buxfer, Toshl Finance, among others.
4. Instill a 2 week shopping ban
If you love online shopping, this might be a little tricky. But here’s the truth — you really don’t need as many things as you think. Many buys, especially those we shop online are impulsive buys. If a 2 week ban each month seems unachievable for you, try a one week ban instead. You’d be surprised at how much you save by the end of the month!
The key to keeping to these financial habits is to make them achievable and quantifiable. Having resolutions that are overly vague or unattainable will cause more harm than good to your financial health. Having the right strategy to tackle your financial woes might seem like a hassle at the start but it’ll pay off in the long term!