Resolutions to Consider
According to researchers from the University of Scranton, 45 percent of Americans set New Year’s resolutions. Unfortunately, only 8 percent are successful in achieving their goal. Sticking with a resolution requires focus and discipline, but if you’re successful, the resolution can often have a big positive impact on your life.
Some of the most common resolutions include things like losing weight, quitting smoking, or pursuing a hobby or passion project. This year, you may also want to consider resolutions that can improve your financial situation, especially if you’re behind on reaching your goals or have had major changes in your life.
Below are a few resolutions to consider. If you currently don’t implement these strategies, now may be the time to do so. Achieving just one of these resolutions could significantly improve your financial future.
Use a budget
Nearly two-thirds of Americans don’t use a household budget, which is unfortunate because a budget is one of the most powerful financial tools at your disposal. A detailed, well-maintained budget can help you make thoughtful purchasing decisions and keep your spending in check.
When you create your budget, separate your expenses by category and group them by fixed and discretionary costs. Be sure to add in savings as a fixed expense. Think of savings just like your mortgage, insurance, or other mandatory bills. By getting in the habit of paying yourself first, you can quickly increase your savings balances.
Tackle high-interest debt.
For many, debt is a necessary financial tool. Debt can be used in a number of positive ways, such as buying a home or funding an education. However, it can also be used in ways that could be corrosive to your financial future.
For example, high-interest credit card debt can be a drag on your ability to save. Every dollar you spend on credit card interest is a dollar that can’t be saved. If you have been struggling with credit cards, make 2017 the year you take action. Develop a plan to pay down your debt and also examine ways to reduce your interest rates, perhaps by consolidating your balances.
Increase your savings rate
Are you making retirement contributions to qualified accounts like a 401(k) plan or IRA? Qualified accounts can be very effective ways to save for retirement because they offer tax-deferred growth. The best way to maximize the tax-deferral benefits is to contribute as much money to the accounts as possible.
Consider increasing your contribution rates this year. Even a small increase can have a big impact on your savings efforts because those increased contributions can compound over time. Think about gradually increasing your contributions over time. For example, you could increase your 401(k) contributions by 1 percent every year.
Examine your risk protection
Even the strongest financial plans can be undone by an unexpected emergency. Medical bills, home damage, disability, or even job loss can all wreak havoc on your financial stability. Take some time this year to review your risk exposure and develop a protection strategy.
You may want to change your insurance coverage or even examine new forms of protection. If you’re nearing retirement long-term care is a potential risk that can be minimized through insurance. Also consider building up your emergency reserve to cover any sizable out-of-pocket costs you may face.
Ready to achieve your financial resolutions? Let’s talk about it. Contact us at Milestone Coach Advisory. We can help you examine your needs and goals and develop a plan. Let’s connect soon and start the conversation.
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