New Year offers the chance of a fresh start, and one of the most positive changes you can make is to get your finances into shape. When your money's under control, life's less stressful in most other ways as well. Here are seven New Year's resolutions which will help smooth your financial path through 2018.
Stop One Bad Habit
The path to a better budget is easier when you take it one step at a time. This New Year, think of one bad financial habit you have and aim to eliminate it as soon as you can. Whether this is online impulse shopping you later regret or a weakness for eating out when you can't really afford it, making one single change is more achievable than trying to change your whole financial life around.
But what's more, once you're comfortable with losing one bad habit, you can move on to the next. Over the course of a year, many small efforts will build up to excellent results.
Promise to Check Your Statements
When your credit card or bank statement comes through your door (or into your email inbox), it's tempting to ignore it. This is especially true in January, when your spending over the holidays can make for painful reading. However, leaving your statements unopened is a fast track to financial uncertainty.
Carefully reviewing your transactions list can alert you to patterns of unnecessary spending you can cut back on, as well as possibly showing up subscription payments still being made for accounts and services you no longer really need.
Check Your Credit Report
In the same way, making a pledge to regularly check your credit report can pay excellent dividends. It may be daunting to do this if you suspect your credit rating is less than perfect, but until you know your real situation you can't begin to deal with it.
Also, regularly checking your credit file will give you a chance to spot any fraud attempts before they wreak havoc on your financial status.
Prioritize Your Debts
Paying down debt is always an excellent resolution to make, but for best effect, you need to go about it with proper planning. It may be tempting to try and clear your smaller debts first so that you feel like you're making progress instead of throwing spare cash at a large debt which doesn't seem to get any smaller. In fact, the better option is to focus your efforts on whichever account has the highest interest rate, reducing this largest drain on your finances as quickly as possible.
However, if you value the psychological boost of clearing small balances, make sure you redirect payments on newly cleared accounts toward your next most expensive debt, to set a snowball effect rolling.
Pay More Than the Minimum
No matter which other kinds of debt you have, if you have credit cards in the red you should always try to pay more than the minimum statement amount. If you stick to the required amount, almost all of it is swallowed up by interest and charges, leaving your actual debt largely untouched. Every dollar extra you can pay will have more effect than you might think.
Even if you can only put aside a small amount each month, getting into the savings habit is a good idea. Also, it's easier to take saving more seriously when you see an amount start to pile up rather than putting it off because you think you can't afford a worthwhile amount. Ideally, consider starting a retirement plan, but if you can't stretch to that, squirreling away a few dollars a month into an easy access account is a start. You can always invest the proceeds in a more formal plan later on.
Spring Clean Your Accounts
Lastly, take the New Year as an opportunity to give your finances a spring clean. Do you have any old bank accounts which are open but not used? Or cleared credit cards you've been keeping in reserve? If these accounts are attracting charges, then it's essential to close them. Even if they're not costing you anything, formally closing them will simplify your financial landscape, reduce the amount of mail you get, and make it easier to concentrate on your active accounts.
If you've ever imagined what life would be like with smoother finances, then the New Year is an ideal time to start taking action, and every little step will take you nearer to your goal.