6 New Year’s Resolutions for Maintaining Your Budget
For many, New Year’s resolutions are nothing more than a meaningless tradition. Taken seriously, however, they can give you the tools to take control of your 2020 finances.
It’s a new year, and with it likely comes the promise of self-improvement. But while millions of Americans rush to make New Year’s resolutions, most do not follow through on them. Per one study, a whopping 88% of all resolutions end up in failure.
A theory in modern archaeology suggests that the original notion behind New Year’s resolutions came from the Babylonians, who would make promises to their gods to return borrowed goods and repay debts. In this vein, resolutions toward strong financial health are the most traditional and the most in line with resolutions’ original intent.
Here are some New Year’s resolutions you can use to master your budget.
I Will Have Clear, Simple Financial Goals
The more specific you are with your goals, the more successful you’re likely to be. Say you’re saving up for your child’s education, for example. This is honorable, but have you considered if he/she opts for a private college instead of a public one? What if he/she is accepted into a prestigious school? Are you saving for an associate’s or a bachelor’s degree? What if he/she wants to go to graduate school? You don’t need to cover all eventualities, but you should understand what these factors may be so you can research options.
I Will Track My Budget
Many people “wing it” with their budgets, believing they can figure out their spending on the fly. While the logic behind this is sound — not having a written budget allows for easier improvisation when needed — it can lead to abuses. Having a written budget not only commits you to a set plan, but it forces you to seriously consider what money you’re earning and what you’re spending. This can help expose waste and expendable luxuries, which can help tighten your bottom line.
I Will Pay Attention to My Credit Report
Errors to your credit history can be devastating. Not only can they make it more expensive to buy large-ticket items, but they can also stop you from renting a home, prevent you from getting a job, or — in the case of identity theft — can get you sued or arrested. It’s essential that you regularly check your credit report. You’re entitled to a free credit report from all the major credit bureaus once a year and can request it at annualcreditreport.com. If you find a mistake, request that it be flagged and disputed, so that future creditors can see that you challenged a particular item. While the credit dispute process is complicated, it’s simpler than having to resolve the long-term effect of damaged credit.
I Will Have No-Spend Days
It’s easier than ever to spend money today. From food and merchandise home delivery to streaming services, modern society is designed to make spending convenient. If possible, try scheduling days or weekends where you commit to spending no money — be it physical cash, debit, or credit. This may be easier to accomplish in the winter than the summer, so making this resolution now will get you off to a great start.
I Will Prioritize Debt Payoff
Interest can be a killer. The longer you hold on to a debt, the more you will pay in interest for that debt, shrinking your budget. While it may be a temporary burden, dedicating an extra $50 more to your debt payments per month can save you thousands of dollars over the life of the debt. You may also want to reorganize your debts to best match your financial strategy. An avalanche approach to repayment, for example, seeks to get rid of the biggest debts with the highest interest rates first, as reducing them will save the most money in the long run. Conversely, getting rid of the small debts quickly can be an emotional victory that can give you the push to tackle the bigger debts.
Practice Good Maintenance Habits
A rule of thumb for anything mechanical is that it’s usually more expensive to replace the thing than to maintain the thing. Catching small problems when they occur in your home and car will cost less than having to deal with a major problem down the road. This includes patching leaks, changing filters, having regular inspections, checking for infestation or mold, and replacing insulation. Not only will your fuel bill be less with regular maintenance, but you can avoid the hassle of having to solve major problems on the fly.