A new year signals a new start for many people. Whether it is with your health, your relationships, or your finances, it is as good a time as any for a re-birthing. When it comes to one’s finances, there are some relatively easy New Year’s financial resolutions you can do to exit 2018 in a better financial position than when you started. Listed below are 3 easy post New Year’s financial resolutions you can make.
Financial Resolution 1: Build an Emergency Fund
It is estimated that roughly one out of every three American adults has no money stashed away in an emergency fund. This often means that they will have to take on high-interest credit card debt in order to pay for an unexpected expense. No matter your age, any amount of money in an emergency fund will be of benefit. Focus on saving $100 a month into an emergency fund. By the end of 2018, you will have $1200 stashed away for those unexpected expenses.
Financial Resolution 2: Create a Budget
Earning money is important, but also of high importance is tracking your spending. I love the following example:
A teacher making $40,000 in annual post-tax salary, but spending $35,000 of it, has more savings at the end of the year than a doctor earning $120,000 in post-tax salary but spending $130,000.
The point of this example is that if you can make a lot, but if you spend a lot you will never get rich. Budgeting allows you to monitor you income while also keeping track of your expenses. We offer a free monthly budget on our website to help you get this resolution underway.
Financial Resolution 3: Open an IRA
Recent tax reform has lessened the financial burden of taxes on many individuals and families, but another way to reduce taxes while funding retirement is through an IRA. Traditional and Roth IRA’s are both good options to help save for those late years in life. I prefer a Roth IRA; you put in after-tax money now, and it grows tax-free and has tax-free withdrawals. Most people qualify for IRA’s, and the best part is that they are easy to open. Many IRA’s can be started with as little as $100.
Not everyone is a fan of New Year’s resolutions, but that is part of the reason why people make them. They have goals they want to achieve. Those goals may be monetary, personal or health, either way they hope to be in a better place at the end of the year than they were at the beginning. If you haven’t made a New Year’s resolution, it isn’t too late. We aren’t even a week into the new year. I challenge you to try at least one of these 3 easy post New Year’s financial resolutions and make your finances great again.
Budget Smart, Invest Wise