5 Financial Resolutions for the New Year
A new year has arrived. Have you made any resolutions? The bigger question might be, will you stick with them or fall off the wagon by the end of January? If you’re looking to get financially fit in 2022, keeping your financial resolutions realistic and attainable will set you up for success. We’ve come up with a few below that could make a big difference in your finances during the year ahead.
Make a Realistic Budget and Stick to It
Budgeting is a lot like counting calories—if you’re not paying attention, it’s easy to lose track of how much you’re spending. But if you write it down and plan it out, those numbers don’t lie. Each dollar adds up. One day of spending might not seem like a big deal, but daily spending habits can make or break you in the long term.
By closely watching your budget in writing, you can quickly see what you have left and can avoid unnecessary expenses. Creating a budget will help you spend less and save more.
To stick to your budget, set reasonable goals, including a goal for how much you want to save. We’re humans. We love challenges. Set small, feasible goals that you can accomplish on a monthly or weekly basis. Once you complete them, set a new goal. Continue to do this and you’ll create a habit. The longer you stick to a budget, the easier it is to do it.
Pay Your Bills Right After Pay Day
It’s smart to review your regular bills every few months. Write down when they’re due and whether it’s a fixed amount or the amount varies. Look at each bill and line it up with your paychecks. Include on your spreadsheet the dates you get paid. If you happen to know the exact amount you’ll get paid, include that, too. Once you do that, split your bills up evenly between your pay periods each month.
The problem many people face is trying to pay everything with their first paycheck. It’s better to balance what is due by the dates that your bills are due, so you distribute things evenly across your paychecks. However, the sooner you can pay off your bills, the better.
Pay Off a Credit Card
While credit cards can be a way to improve your credit score, you should not let your balance accumulate. Stay away from high-interest credit cards, like those from a department store. It’s very easy to get approved for one but it can be risky.
The best thing you can do is include your credit card in your budget. Write down the amount you owe and the minimum payment due. You should know how much you have to budget toward your credit card. If you have multiple cards, pay the minimum payment on the cards with the lowest interest rates. Whatever you have left, put that entire amount toward your highest rate credit card in order to pay it down first. As soon as you pay down the card with the highest rate, move on to the next.
Add One Month’s Pay to Your Emergency Fund
This financial resolution is going to depend on your saving amount. The end goal should be to save one month’s pay for your emergency fund, but if you can’t get this saved within four to five months then you need a smaller goal. Take baby steps. For example, if you get paid $2,000 on a paycheck but can only afford to save $10, don’t be discouraged. It’s better to take small, manageable goals, and build on them. Maybe you start by saving $150 in a month, then increase it. Forming a habit will turn into a bigger dividend.
Prepare for the Unexpected with Insurance
Insurance should not be an option. It should be a priority. No one thinks about it until they need it. People who often get hit the hardest are those who aren’t prepared at all. No one wants to think about their mortality, but insurance is so important to ensure future financial stability. Even if it is a small amount, your life insurance needs to be there to make things much smoother for your loved ones.
This mindset also includes car insurance. What happens if you get hit by an uninsured driver? Do you have insurance to cover the damage? And how about health insurance? Unfortunate situations happen and you need to be prepared for the unexpected.
Go into 2022 with financial resolutions that you can picture achieving. Don’t aim too high or you’ll likely get discouraged and give up. Set small goals and build from there. Let PlainsCapital Bank help you achieve your financial goals. For more tips on spending on a budget, establishing good credit, or growing your finances this year, visit the “Managing Your Money on Your Own” page at PlainsCapital.com.