Monday, 10 December 2018
Many people make financial resolutions in January, only to fall back into their old money habits before Valentine's Day.
Even though 45 percent of Americans make New Year's resolutions, only 8 percent actually achieve them. Here are five reasonable, easy-to-keep New Year's resolutions that can have a big impact on your personal finances over time:
Before you can change your spending and saving habits, you need to know the state of your finances. Calculating your net worth can give you a comprehensive picture of your personal financial situation and help determine where to focus your attention. There are plenty of free online tools for calculating your net worth, and these same tools can help you analyze your monthly spending so you can see where adjustments can be made.
The words "specific amount" are emphasized here. Experts say that it's important to make specific, achievable resolutions. Instead of making a bold resolution that you're going to completely get out of debt, you should resolve to pay off a specific amount that can be reasonably managed. For example, resolve to pay $100 more each month on a credit card balance, or focus on paying off one particular debt. By setting a specific debt-reduction goal, you can see your progress and have a better chance of success.
Most people want to save more money, but find it difficult to squeeze even a small amount out of their monthly budget for savings. Nearly half of Americans have no savings at all. Again, set a specific, affordable goal. You can resolve to save an extra $100 a month by setting up automatic transfers from your checking account to your savings account.
You can also increase your contributions to any employer-based retirement plan you have access to. Saving through your employer makes even more sense if the plan offers matching contributions. Most banks make it easy to put funds in a savings account automatically each month, and most employer-based retirement plan contributions are taken out before you're paid. Getting the money into an account before you have a chance to spend it can improve the chances of reaching your savings goal.
You can often find ways to cut spending by analyzing your monthly expenditures. Are you paying hundreds of dollars each month for cell phone, Internet, and cable services? Can these be combined, trimmed, or even eliminated?
You may have subscriptions or memberships you're paying for, but never use. See where your money is going, and look for easy ways to cut back. Once you've found ways to reduce spending, set an achievable goal. For example, try reducing your monthly grocery bill by $50 by stretching recipes and cooking in bulk. Once you start trying to save $50 and become more cost-conscious, you may find yourself saving even more.
You should check your credit report at least once a year, and January is a perfect time. It's important to always be aware of what's on your credit report, as it can affect you when applying for a mortgage or interviewing for a new job. You can request one copy of your report each year from the big three consumer credit reporting agencies: Experian, Equifax, and TransUnion.
Other companies claim to offer free credit reports, but it's a good idea to carefully review their terms and conditions before accepting. Make sure your personal information is correct. Look over your credit report for possible mistakes, such as an account you thought was closed but remains open. There may also be a payment you know was made, but marked late or unpaid. Carefully review your report and make sure you recognize all listed accounts. If you find mistakes, contact the consumer credit reporting agency to dispute them. And don't worry, checking your own credit report has no impact on your credit score.
The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA Compass does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.
Check out these five strategies to help gain control of finances and alleviate some stress.
New York can be crazy expensive, but here are some ways to have a fun-filled trip without spending a fortune.