As we head into 2017, it’s common to reflect on your past year and make resolutions for the new year. While typical resolutions often include eating healthier or becoming more organized, what about taking stock of your finances and making financial resolutions?
While everyone’s financial situation is unique, here are some strategies and goals that can benefit all of us:
Create a budget and follow it
In an era when seven out of 10 Americans have less than $1,000 in savings, everyone can benefit from having a budget. A budget determines how you spend money, helps prevent you from running out of money, and helps you save money for goals and emergencies. Nerdwallet.com provides excellent advice on building a budget, and recommends some useful technology tools that can help you stick with it.
Try to save at least 15% of your income
With a recent survey finding that 1/3 Americans have $0 saved for retirement, most of us can benefit from saving more. And according to Fidelity Investments, saving 15% of your income is an effective strategy to build retirement savings. It’s also suggested that you use of tax-advantaged savings accounts such as traditional 401(k)s and IRAs. With these, your contributions are made before tax, lowering your taxable income and giving you a tax break the year you contribute. Even better, that money can grow tax-free until you withdraw it in retirement.
Check your credit report and score
Make permanent resolution to review your credit report and check your credit score at the start of each year. You can obtain a free credit report online to analyze your monthly expenditures and resolve any delinquent accounts. There are also free resources online to check your credit score. If you have higher credit score, it will cost you less to borrow money, such as for a mortgage. It’s also becoming increasingly common for prospective employers also check job candidates’ credit reports.
If you’re struggling with poor credit and want to improve it, check out our video on easy ways to raise your credit score. And make a financial resolution to always pay your bills on time, without exception.
Ensure you have enough insurance
Take some time to review your various insurance policies to see if there are coverage gaps or potential ways to save money. If a disaster strikes, it can be financially devastating if you don’t have enough insurance coverage and have to pay out of pocket.
The beginning of the year is an excellent time to make financial resolutions
Taking time to follow these tips and set financial resolutions can improve your finances into the years and decades ahead. Whether you’re planning on buying a house, want to build retirement savings, or want to be be better prepared for unexpected costs, start preparing now.