It is hard to believe, but November is almost here. That means it is New Year Resolution time! Yes, it’s early, but since most resolutions never amount to much, let’s start early!
Don’t worry: Since this is a financial blog, I’m going to focus on financial health resolutions rather than the diet & exercise variety.
Top 5 Financial Health Resolutions:
Track your Budget
If you don’t track your monthly expenses, start now. It is easy for small weekly costs to add up to large monthly expenses without realizing it. Seeing your total monthly expenses is a good first step to cutting unnecessary expenses.
Get out of Debt
Let’s assume you have $1,000 in credit card debt that costs you 12% per year. Do you have any assets that can be sold to pay down your expensive debt? As an example, what if you had an old boat that you don’t use that could be sold for $1,000. In a roundabout way, owning the boat costs you $120 per year, ($10 per month) since if you sold the boat, you could pay off your $1,000 debt.
Save enough cash to cover 3-6 months of expenses. It is important to be prepared for random expenses or a job loss. A solid emergency savings account can help you preemptively stay out of debt.
Make a Roth Contribution (if you can)
Not everyone is eligible to contribute to a Roth IRA, but if you are eligible, be sure to take advantage of it. A Roth IRA is an excellent place to achieve investment growth due to its tax free nature.
Increase your 401k contribution
Make sure you contribute enough to your 401k in order to receive your employer match. Contributing beyond that level is not a top resolution, but if you have taken care of all the resolutions above this is a good option.
And just because you asked: Top 4 Healthy Financial Resolutions
Skip the gym: Save the cash and go exercise outside.
Don’t go out to eat: Go to the grocery store and make a homemade meal.
Cut your cable cord: Save the money and watch less TV.
Drink water: It’s healthy and it is cheap.