Towards the end of the year, many of us start to reflect on the past 12 months and set plans in place to make the next year even better. “Getting finances together” is one of the most popular New Year’s resolutions that comes up.
But sorting your finances out isn’t always simple or easy. Nor is sticking to a New Year’s resolution. If you want the best chance of sticking to new habits, you should keep them simple, achievable, and measurable. Below, we cover some simple financial New Year’s resolution ideas to work on.
5 healthy money habits for the new year
1. Start thinking of retirement
If you’re not already planning for retirement, make this one of your top healthy money habits going forward.
Retirement may be a way off, but the earlier you start, the better off you’ll be later on in life. Take advantage of any workplace contributions to your 401k, but also look into Roth IRAs and even the stock market to try and build up a good nest egg.
2. Find a budgeting system that works for you
Sticking to a budget is always a challenge. But if you can find a budgeting system that works for you, it can transform your money habits.
Cutting back on everything you love isn’t a sustainable budgeting system for most people. So, try another method out next year. Do some research on methods such as the 50/30/20 method, the envelope method, and the 80/20 tactic and try a few out. The best budgeting method is the one you can stick with!
3. Clear your credit card debt
Credit card debt is one of the most common types of debt people find themselves in. It’s so easy for it to get out of control, especially during the holiday season.
If you have credit card debt, the sooner you can pay it down, the better. Interest rates are usually high for this type of debt. So, for the new year, try to clear your debt faster by committing to making extra repayments each month.
If you have multiple debts, there is another tactic you can try. Sit down and make a list of all your debts, the interest rates applied, and prioritize them in order of smallest to biggest debt.
Then, you can utilize the snowball method of clearing debt. This means you start with the smallest debt first and make extra repayments on that to clear it faster. You’ll still need to make minimum payments on the others, but anything extra goes onto the smallest debt. Once that clears, you move on to the next, building momentum as you go.
4. Start building your emergency fund
You never know when the hot water heater is going to break or your car decides it needs a new suspension. In times like these, many people panic and struggle to gather the funds to pay for these expensive emergencies.
If you want to fare better in times of stress like these, an emergency fund is a must. An emergency fund works best as a separate savings account1 set aside purely for emergencies. Think medical bills, car repairs, sudden job loss, and so on. This stops you from having to dip into other savings accounts, rely on fast credit, or use payday loans to get you through it.
Try to save consistently by committing a certain amount or an income percentage each month to tuck away for a rainy day.
5. Quit an expensive habit
This may not apply to everyone, but if you have a habit that costs you more than it’s worth, perhaps it’s time to quit. For example, if you’re in the habit of buying fancy lattes before work or always needing to have the latest smartphone, quitting could help you save a chunk of money. Take a quick look at your current spending habits and see if there’s anything you could quit without impacting your lifestyle too much.
Prioritize your financial health
Whether this past year has been tough financially or you’re just more conscious of improving your finances, the above tips are simple ways to become more financially healthy.
When it comes to sticking with a new money habit, try not to take on too many at once. Focus on one or two for now and see how you do. The last thing you want to do is overwhelm yourself and end up not sticking to any of your new resolutions.
If you want a better way to manage your finances in the new year, consider a Western Union® Netspend® Prepaid Mastercard® account2 to control your spending and earn rewards3.
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