5 New Year’s financial resolutions you can keep
Here are a few important things to consider for your new year's financial resolutions.
New Year’s is almost here, so it is time to start thinking about your finances in 2023
Who said New Year’s resolutions always have to be about diets and exercise? Other areas of our lives need as much attention. Check some new year’s financial resolutions you can make.
With 2022 about to end, and the world still feeling the economic impact of the COVID-19 pandemic, many people feel like their finances need special attention.
New Year’s is the perfect time to plan for the next 12 months.
Whether you finally want to start investing or even just saving money on a regular basis, a New Year’s financial resolution can help you go farther than you think.
In this article we are going to give you 5 New Year’s financial resolutions you can keep for the next year.
Just stick to the plan, and watch prosperity come knocking at your door.
1. Build your emergency fund
An emergency fund is a personal budget which you must set aside as a financial cushion for unexpected expenses. It should be among everybody’s new year’s financial resolutions.
When an emergency happens, the last thing you want is to be forced to take out a loan at a high interest rate, or even have to sell your assets to pay for it.
Emergency funds can save you in situations of distress such as if you lose your job, get into an accident or lose money because of a global pandemic.
If you do not yet have an emergency fund, this should be your number one priority for 2023.
This is one of the simplest parts of building your financial security, although it may not be the easiest one.
First, decide on how much money you must set aside to build your emergency fund. To do that, calculate your monthly expenses such as rent or mortgage, utilities and your basic expenses.
According to many financial experts, an emergency fund should contain at least three to six months’ worth of expenses.
However, aim for the exaggeration and overestimate how much you actually spend on a regular basis. It won’t hurt to save a little more.
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2. Pay off any credit card debt
Credit card debt is a financial assassin. If there is one thing you do not want to carry with you ever, that is credit card debt. Paying off your credit card debt is vital in becoming financially healthy.
Besides getting rid of expensive fees, penalty APR and high ongoing interest rates, paying off your credit card debt contributes to improving your credit score.
If you are currently carrying credit card debt, make paying it one of your top priorities in 2023, and start looking for cards that offer a long 0% APR period for balance transfers.
These cards allow you to pay off your debt by making regular on-time payments every month, while paying no interest on the existing balance.
Making regular on-time payments contributes to improving your credit score, so make sure you apply for a card that reports your activity to at least one of the three major credit bureaus.
3. Start budgeting and tracking your expenses
Nobody can go too far without planning for the future and then sticking to the plan. Financially speaking, this means knowing how much you have at your disposal and what you can do with it.
Budgeting makes you take a hard look at your earnings, expenses, debts and obligations, and devise allotments which must always be filled so that there are no holes in your finances.
People devising a budget for the first time often find it a daunting task, and to be honest, it really can be one of the most boring things you will do.
But the control it gives you over your finances can be incredibly freeing.
Once you have become used to following your budget, you will have the peace of mind you need to decide what to do with the cash that is left.
4. Start Investing
This is when things can start to get exciting. While investing is not easy, it is one of the best ways to build wealth using the money that you have saved, and making it work for you.
The first thing you must think about is the kind of investor you are. Are you a nerdy number-cruncher who loves to watch charts and read balance sheets?
Or are you a creative ADD-type who would rather eat sand than talk about the stock market?
Of course these are extreme examples. You could be anywhere in between or further into the extremes. It does not matter.
What is important is that you know the kind of time you want to spend thinking about investing.
Once you decide about that, you can start learning what you need to know to invest in the style that best suits you. For most people, however, passive investing is the best approach.
However, watch your risk tolerance. The market is still suffering from the effects of the pandemic, and 2023 does not look like it is going to be much brighter.
5. Build Your Credit
If your credit score is not in its best shape, perhaps 2023 can be the year when you change that. A good credit score allows you to get much better offers for both credit cards and personal loans.
Having access to future money (in other words, credit) allows you to stay ahead of inflation by paying expensive stuff in small installments over an extended period.
This means that when inflation hits, you will still be paying the same amount as before.
A good credit score allows you to get financing for a car or even a house. Most lenders are not willing to lend to people with poor credit, and the ones that do charge high interest rates.
Build your credit by making on-time payments on your credit card and keeping your credit utilization low – that is, the amount of credit you have available to you, versus how much credit you actually use.
You can also take out a loan with a cosigner or even become an authorized user on a friend’s or parent’s credit card. A secured credit card can also help.
Quitting smoking will have a bigger impact on your finances than you might think
While we’re talking about new year’s resolutions, let’s see one of the most common ones.
Many people wish to quit smoking, as it is very harmful to one’s health. But do you know how much it can impact your finances?
More than just the cost of the cigarette itself, smoking will impact your finances in many different ways. Read the next article and you’ll see how tobacco can affect your finances.
About the author / Danilo Pereira
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