Making financial decisions to improve your financial situation is a good practice at any time of the year. However, many people find it easier to start changing their lives at the start of a new year.
With the cost of goods and services rising, financial resolutions are foremost in the minds of many consumers. With the right financial rules, you can stick to your resolutions and end the coming year in a better place than when you started it.
Here are 6 practical financial resolutions to commit to.
What Is a Financial Goal?
A financial goal is a target to aim for when managing your money. It can involve saving, spending, earning, or even investing. Creating a list of financial goals is necessary to create a budget. When you have a clear picture of what you’re aiming for, working towards your target is easy. That means that your goals should be measurable, specific, and time-oriented.
Why Financial Goals Matter?
Let’s say your financial goal is to buy a house. Setting goals and rules make it easier to achieve them. They give you motivation and focus on specific steps in
your journey. Purpose guides you in the right direction and financial reviews from Fit My Money can help you to make the right decision. This makes it more likely to go all the way to achieving your dreams.
Knowing your goals, you will be able to correctly allocate the budget and the time for which you can achieve the task. You can also share your dream with loved ones. This step will help you get more support.
You can use apps to track the stage you are in. The app will allow you to measure your success by giving you a sense of accomplishment. The aim is to be in control of your money, so it doesn’t control you. Your future self will thank you for it.
1. Picture Your Perfect Year
Whether it’s January 1st or August 1st, imagine your ideal year. Take the time to not only imagine it in your head but also visualize it on paper. Compare the new year with the previous one. What would you like to change? What financial achievements in 2021 are you proud of? What habits should be removed to improve your financial condition? Take the time to think it over.
2. Track Your Growth
Calculating your own capital is a good start to financial well-being. Capital is your assets. Try to calculate your financial condition at the beginning of each month of 2022. You will see how you are moving towards achieving goals or paying off debt. You can also use financial applications for more convenient statistics.
If you don’t want to bother, you can create your own Excel tracking sheet. Balance comparison shows how monthly installments increase your net worth. In the beginning, they may not seem big. However, the end goal will pleasantly surprise you.
Comparisons of different months or years can also show you the decline in capital. Then it is worth finding out the cause in order to eliminate this problem and return to the right path.
3. Tackle Financial Literacy
Unfortunately, taking personal finance literacy classes is not a requirement in most high schools and colleges across the United States. Because of this, many young people live with ignorance about how to properly manage their money and not get into debt. You must spend time on financial self-development to correct this shortcoming.
You can buy books or take courses to learn more about your capital. If you don’t want to spend money there are many other ways. The Internet has many benefits for financial management. YouTube is full of experts. Don’t miss your chance!
4. Set Short-Term Goals
Segmenting your budget becomes a much clearer practice when you know what you want out of your finances. When you reflect on what you’d like to achieve right now, consider things like improving your credit score, paying off any debt, setting an emergency fund, or tracking your monthly spending.
When you set short-term goals, you are more likely to achieve them. You start saving more and spending less. This rule helps you understand the complex idea of personal finance.
Remember that your financial health directly depends on your daily habits. Some changes will be easy, and some will take a long time to get used to. But if you really want to improve your financial condition, then you can do it without any problems! You will save a lot of money to dedicate towards investments into business ventures and more.
5. Look for New Opportunities
The pandemic caused by Covid-19 led millions of Americans towards unemployment. While some suffer from a lack of work, others take the opportunity to find remote work and earn money without leaving home. There are always better opportunities. As the economy recovers, it’s hard for companies to fill vacancies.
Whether you are currently working or looking for a job, you have a chance to find a better job. Perhaps you have been working as a secretary at a terrible job for 10 years, and in your dreams, you see the profession of a cook. Quit! Open your cafe and earn more! The pandemic is not the time to relax and lose heart. This is your chance.
Even if you are thinking about choosing a loan, do not be too lazy to spend time and choose the most suitable one for yourself. Here are eight of the most common types of loans and their key features.
- Personal Loans;
- Auto Loans;
- Student loans;
- Mortgage Loans;
- Home Equity Loans;
- Credit Builder Loans;
- Debt Consolidation Loans;
- Payday Loans.
6. Increase Your Savings Rate
Your savings rate is the percentage of your income that you keep each month, versus the amount that you spend (here’s how to calculate it). Increasing it, even slightly, will put you in a better overall financial position.
You will have extra money to spend on unexpected expenses or other things, such as buying a house or a car. Personal savings will help you stay out of debt. There are several ways to increase your savings rate.
- Increase your contributions. Try to max out your Roth IRA or boost your automated savings each month.
- Financial experts recommend increasing your contribution by 1 percent annually. In addition to this, there will be a waiver of one monthly subscription that you do not need. Transfer the money from the cancellation of the subscription to a savings account.
Keep your personal goals in mind and be positive about the steps you are taking to achieve them. Remember that it’s about progress, not perfection. It is always better to take two steps towards the dream than to stand still. You will be surprised how important these small steps are on the way to a big financial dream.