A new year often brings hopes, ideas, and resolutions. While we often seek changes in many areas of our lives, finances are often a key area to pay much attention to. Rather than making promises or goals you may or may not commit to, there are some smart financial moves you can make next year to improve your life with your money, creating long-term benefits.
Make Saving A Top Priority
Saving money for a rainy day can help prevent catastrophe when a financial storm occurs. The need for an emergency fund is one of the few things that most financial experts can actually agree on. According to a Bankrate report, most Americans keep some kind of household budget but only 38% have enough money in their savings to pay for unexpected expenses such as emergency medical bills or car repairs. If you don’t have a safety net of cash in the bank to cover unexpected expenses, you’re setting yourself up for possible financial disaster. It may take time to pick up the habit of saving but you can at least start small and set aside a small percent from every paycheck and let the money add up over time.
Give Yourself A Financial Check-Up
To really know where you’re at financially and what needs to be done, it’s good to start with giving yourself a financial check-up. Evaluate by going over every aspect of your finances, including income, assets, debts, insurance, and expenses so you can find weak points. For example, if you realize that you have more liabilities than assets then you may need to work on paying down your debts. Also take the time to review your budget so you know how it fits into your expected expenses for the next year.
Improve Your Credit Score
Maximizing your credit score is one of the best financial moves you can make next year. While it may not seem as obviously beneficial as saving more money, improving your credit score significantly can save you more money than you think. Even if you already have “good” credit, you’d be surprised at how much you can save by improving your credit to “excellent.” This comes into play in scenarios such as buying a home and expecting mortgage rates. In addition to paying your bills on time, focus on paying down your credit cards as much as possible.
This is often something people tend to put off because they think it won’t be relevant until they are older. However, estate planning is not something you should overlook, especially if you have a family. A basic estate plan can include several key tools such as a living trust, life insurance policies, and an advanced health care directive.
Do Away With High-Interest Debt
Typically, as January begins you say you want to get out of debt but when December rolls around, you’re still stuck dealing with the same credit card bills from before. If you’re tired of carrying around a heavy load of debt then it’s time to make next year the time you pay it off for good. Figure out exactly how much you owe and formulate a plan to pay it off.