new year resolutions to boost your finances

New Year Resolutions to Boost Your Finances

When entering the New Year, we all make resolutions. Those who are heavy drinkers promise themselves to drink less in the coming year. I could start to list resolutions and will never end, but people always forget to include an important part of their lives – finances. Making resolutions that do not include your finances, may mean making no resolutions at all. Because you need money to handle every other aspect of your life. If you don’t make plans for how that money would come, be spent, and even multiplied, your year may not go in the direction you hoped. In this article, we would take a look at New Year resolutions to boost your finances.

6 New Year Resolutions to Boost Your Finances

Resolution 1: Get More Income Sources

Getting extra sources of income is important for everyone who wants to live comfortably. Extra income sources allow you to save more and invest more. In addition, you’ll be free from debt.

Some people already have day jobs that take almost all their time. But do you know that there are jobs you can do in your spare time? For instance, we have remote, freelance, and online jobs that only require you to sit in your homes. In some cases, you can decide to work comfortably throughout the year and earn from different sources.

Check out the best side gigs to make extra money

So, let this be the year you employ your skills to make extra money for you. Some people know how to write, brilliantly edit pictures taken with their cameras, and even communicate excellently with others. Put all these to use, and you’ll have some extra cash sitting in your bank.

Resolution 2: Save More Money

Do you know that nearly half of the American population wants to save more this year?

More people are beginning to care about what happens when they stop working. Even when you have stable jobs, anything can happen. You may need to spend money on child tuition, health issues, etc.

So, if you don’t have enough money saved to carry out these expenses, you’ll be left stranded.

One of the best and easy ways to save more without feeling it is to increase your 401k contributions. Putting some extra money into your 401k will show when you retire. Interest would accrue over the years and you’ll have enough to live on during the later years of your life.

Also, setting up automatic transfers to a high-yielding savings account will help you a lot.

Finally, cutting back on all unnecessary spending will both help you take better care of yourself and increase your savings.

Here are easy ways to save for retirement

Resolution 3: Create and Stick to Your Budget

Creating a budget in 2020 is useless if you can’t stick to it. So, the first resolution you should make is to stick to whatever budget you have created. I want you to know that when you’re creating a budget, you should aim for something that would last long. Of course, new issues will arise and you will have more obligations, but you should never go from keeping a budget to living without one. What you can do is adjust the current budget to suit your future need when the time arises.

Creating a budget helps you know what you really need and can afford. Also, you’re able to easily identify areas you can cut back on. A budget should be one of your top new year resolutions to boost your finances.

Check out our beginner’s guide to budgeting

Before you create a budget, write out your fixed expenses and see how much remains for flexible expenses. To get all your expenses in one place, take a look at your credit card statement.

Additional tips to help you create a great budget:

  • Calculate your annual net worth

Calculating your net worth yearly helps you determine how much you’ve gained or lost after each year.

To do this, make a list of all your assets, and subtract your liabilities.

  • Preparing for emergencies

A budget without an emergency plan is not a complete budget. As said earlier, no one knows what can happen in the next hour. So, you have to plan even for the unforeseeable. This is where emergency funds come in. Emergency funds are different from your regular savings. This is the pocket you put your hands in when something unusual happens.

Also, Life on the Dough has prepared a printable monthly budget sheet to get you swiftly through 2020. Put in your email and have it sent to you today.

Resolution 4: Improve Your Credit Score

If your credit score was sinking last year, you have to find a way to raise it in the New Year. When you have a bad credit score (below 700), it is difficult to start your own business, get approved for an apartment, get a cell phone contract, and even high insurance premiums. A bad credit score has also cost several people great employment.

To improve your credit score –

  • Pay your bills on time:

Getting your bills paid before they are due will boost your credit score greatly. If you add the Resolution 1 to your New Year plan, you’ll have enough money to take care of your bills and settle your debts. Also, ensure that your bills are paid in full. Because paying just a part of them won’t do much to your credit score.

Meanwhile, to avoid feeling the great impact of paying all these bills, set them to autopay. As a result, you’ll never notice them go.

So, you can settle with what you have left.

  • Limit the number of new accounts you create

According to Experian, 61% of Americans have a credit card. Some Americans have just 1 credit card and several others have more than 4, but an average American has four credit cards.  If you want to improve your credit score, limit the number of accounts you create. Do you know that when you apply for a credit card, whosoever is issuing the card pulls out your credit card score? This negatively affects your credit score, but it will get back to normal if you keep doing things right.

  • Pay off debt

Some people already have debts on their credit cards. As the debts increase, your credit score tanks. To get a great score, you have to pay off debts. Although this may mean you cut off on some spending, you’ll see the benefits in the nearest future.

Resolution 5: Optimize Your Portfolio

Investing in 2020 is very important. This is another one of the new year resolutions to boost your finances you should pay attention to.

Although most people are afraid to invest because of the risks involved, it is a great way to earn more on your money. Everyone needs good investing results but you have to study the timing of the markets properly so you don’t lose out.

Here are things to do to ensure your investments yield more profit than loss

  • Diversify

Diversification reduces the risk on each of them. Putting all your eggs in one basket means if something goes wrong, you lose everything.

To diversify, you can try things like exchange-traded funds (ETFs) and mutual funds.

Also, you should consider your taxes. How do you want to reduce your tax bill? Opening tax-advantaged accounts will do this for you. These include traditional or Roth individual retirement account (IRA).

  • Put the entire investment mix in focus

Have investment goals you want to meet at the end of the year.

Your investment mix includes bonds, stocks, and cash in your portfolio. As you invest, make sure the entire mix is still in sync with your goals (both long and short term), time frame, and risk tolerance.

Resolution 6: Get Insurance

It cannot be overemphasized that you should prepare for the unexpected.

For example, health challenges, job loss, disability, death, natural disasters, and lawsuits among others are just some of the things that can happen to any man.

So, it is important to get insurance covering several issues. Some of them include:

  • Health insurance: When taking health insurance, consider one that provides highly deductible policy to insure against the possibility of a severe illness. So, you’ll have a backup plan even if that time comes.
  • Life insurance: If you have children or obligations such as liabilities that won’t end with your death, you need life insurance.
  • Casualty insurance: Many people have properties such as homes and vehicles. People who fall in such a category should get insurance which includes homeowners and auto insurance policies.
  • Long-term disability insurance – Studies have shown that an individual over 20 years of age has a 19% chance of becoming disabled before retirement age and a 3% chance of dying. Because it is more likely to lose a part of you, you have to get the insurance that covers this.

Bottom Line

Knowing what you want to achieve at the end of the year is important. But to reach these goals, you have to make resolutions and plan appropriately. Financial resolutions should not be left out because your finances matter a lot in your day-to-day activities.

So, get your finances right today by making new resolutions and sticking to them.

Happy New Year from Life on the Dough!

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