Financial goals are as common as health goals when it comes to New Year's resolutions. If you want to get on track financially this year, consider these following points.
Invest More in Retirement
No matter your age, it's never too early to start saving for retirement. If you haven't started, make this a New Year's resolution. If you have started, try investing or saving more. If you have a 401(k) through your employer, meet your employer's match if you can. Another option is to open an IRA. If you're over 50, you can go beyond your previous yearly contribution limits with "catch-up" contributions, which can help you be more prepared for retirement. You can also save more for retirement in a savings account.
Reduce Your Expenses
Look at all of your regular expenses and figure out where you might be able to save. Cancel unused or barely used subscriptions or memberships. Maybe you can substitute some of these for less expensive or free options. For example, cut out popular streaming services for one of the many free, ad supported streaming options.
Reduce your grocery bill by buying generic brands, planning meals that use some of the same ingredients, and sticking to your shopping list to avoid impulse purchases. You can also eat out less and reduce your gas consumption by driving less. Reduce your energy bill by being mindful about turning off lights and electronics when not in use and reduce your water bill by taking shorter showers and limiting your overall water usage.
Create a Budget
Create a budget and stick to it all year. Use a budgeting app to help you stay on track. If you share finances with a spouse or partner, make sure you're on the same page about the budget and communicate about it to stay on track. Set limits on different expenses, such as groceries and entertainment. Save money each pay period and stay prepared for unexpected expenses.
"Sometimes, all the planning in the world can’t prepare us for unexpected expenses," says Erin Dunn at Credit Karma.* "Things like car repairs or trips to the emergency room are impossible to predict. That’s why it’s crucial to factor an emergency fund into your budget. For starters, aim to save the smallest amount that will make you feel taken care of in an emergency. After that, experts typically recommend securing three to six months of expenses so you’re at peace in the event of an emergency."
Reduce Your Credit Card Debt
If you have a lot of credit card debt, paying it down should be a priority. Not only will it ease a major financial burden, but it will also free up credit that can give you additional spending flexibility.
Reduce your card use and use some of the money from your expense reduction to pay your debts. Increase your monthly payments and/or payment frequency. Focus on paying off the card with the highest interest rate first, which will help you get ahead more quickly. If you're struggling to make payments, reach out to the card issuer and negotiate. You may be able to get a smaller monthly payment or even a reduced balance. Explore your options.
Work on Improving Your Credit Score
When you improve your credit score, you can get better interest rates and improve chances for approval on loans and lines of credit. You can do several things to work on improving your score, in addition to paying off your credit cards. If you don't have any credit cards, it can help to simply start building credit. Start by applying for a card. Make sure you pay all your bills on time, and limit how often you apply for new cards or other financing.
If you want 2024 to be a great year for your personal finances, work on your credit, your debt, your retirement funds, and your overall budget. By reviewing your finances and setting some goals, you may find yourself in a much better place a year from now.
*https://www.creditkarma.com/cash-flow/i/budgeting-tips#8-save-first-then-spend