With the New Year comes new outlooks, new resolutions, and.... new holiday credit card bills. But despite the fact that nearly half of the American population commits to a resolution (or bettering themselves in one way or another), less than 10 percent succeed in achieving those goals.
If your resolution has to do with money management... those success odds aren't too promising.
Have no fear! You can achieve your financial resolutions.
These 10 financial resolutions, derived from WalletHub, will ensure that you're in the 'less than 10 percent' and that 2018 means good standing for your bank account.
1. Invest in credit monitoring
Free services that check your credit score are widely available these days -- that's a great thing! Still, too few of us are familiar with the content of our credit reports.
No one can is able to keep a round-the-clock watch on their credit report. And that’s where 24/7 credit monitoring comes in.
Sign up for free credit monitoring to stay in the know of the important things. For example, a credit monitoring system will send you an instant notification anytime there is an important change to your credit report. It reduces lag time between spotting issues and gives you the peace of mind knowing that you don't have to be the one checking your credit every 15 minutes.
2. Be timely with your bills
We recommend paying your monthly bills right after payday, so that you take care of obligations before indulging. Consider setting up two automatic monthly payments from a deposit account:
- One that will pay bills right after payday
- One for a couple days before your monthly due date
Installing a second payment will help you avoid interest on any purchases made between your first payment and the end of your billing period. If you don’t know when your billing cycle begins and ends, simply check your monthly statement (you can also request to change it).
Bonus: paying your bill early improves your credit utilization, and thus your credit score.
3. Pay back 20 percent of your debt
Making a plan to pay off 20 percent of what you owe throughout course of 2018. It doesn't have to be all at once... but over the entire year.
In terms of averages, that would amount to about $1,710 for a household, requiring monthly payments of $143 with a card offering 0 percent on transfers for at least 12 months. You can use a credit card payoff calculator to determine the numbers in your specific situation, and if you can afford higher payments, by all means make them.
The sooner you can reach debt freedom, the better off.
4. Use different credit cards
Use different credit accounts to serve different financial needs.
Doing so will help you obtain the best possible terms on each card, rather than settling for average terms on a single card. It will also help you reduce the cost of your debt.
5. Add one month's payment to an emergency fund
People without a 'rainy day fund' of sorts put themselves at risk of financial catastrophe in the event of an unexpected, financial obstacle.
Building up some reserves should be one of the first orders of business this year.
6. Improve your credit score
Most people have room for improvement when it comes to their credit score.
The best way to improve your credit is to maintain an open credit card account that is in good standing. The card will then report positive information to the major credit bureaus each month, to build a better long-standing credit score over time.
7. Become wallet literate
Start the year off by taking WalletHub's WalletLiteracy Quiz. Then study the areas where you struggled and periodically re-test yourself to gauge your progress.
Resolution? Get at least an A- by the time 2019 rolls around.
8. Focus on you
There's a connection between physical, emotional and financial health.
Think about it: the average person spends about $4,612 on health care each year. Money is also our biggest sources of stress, according to the American Psychological Association. And people who get regular exercise tend to have better credit scores.
Seriously.
Get out and go for a walk, join a spin class, and do something positive for your physical health.
9. Stick to a budget that works
Set a budget by:
- Gathering your bills from the past few months
- Making a list of all your recurring expenses
- Rank those expenses in order of importance, with true necessities at the top
- Cut from the bottom of your list until your take-home exceeds what you plan to spend
- Keep track of your monthly spending to ensure you’re sticking by your budget
10. Reevaluate your job
We often get so caught up in spending less/saving more that we forget to address the root of the problem: how much we earn.
Consider your job... then consider which moves make sense for you.
In terms of searching for a new job: the benefits of finding something with a higher paycheck could actually end up outweighing everything else put together. For others, an entirely new career will be the best answer.
You also might want to consider a different trade up, such as:
- Moving for a lower cost of living
- Going back to school to gain skills that will add earning potential
The New Year is fresh upon us. Keep your bank accounts, credit, and financial management just as crisp with these 10 financial resolutions!