How About a Personal Finance New Years Resolution

As we get into the month of December we start to reflect on what we accomplished this year (or did not), which is why you see people flood the gym to get memberships to start out the new year, trying to get into shape.  A few months pass, the gym clears out, and you find yourself paying for a membership that you’re not using.  Sure, it might be $50 a month which is a lot, but by ignoring your household finances you are not only jeopardizing yourself now, but also your future.  Instead of looking to get into shape, focus on getting a handle on your finances.

Reduce Unnecessary Expenses

If you were to take last month’s credit or debit card statement and go line by line, circling what was a necessary monthly expense, and what was not, you will probably be shocked when you add up those that could have been avoided.  The more you can free up extra money by reducing unnecessary expenses, the more you’ll have to fund other areas that may be lacking now.  Controlling spending would really be the first step in a personal finances overhaul for the new year.

Pay Off Credit Card

Credit card do have perks, especially when it comes to earning rewards on the purchases that you make, but unfortunately if you don’t have the discipline to be able to spend what you can pay off when the statement balance comes in, you begin to pay interest, and little goes to chipping away at the balance, and more seems to pay for interest.  If you can continue to make large payments on the balance is gone, while not getting into debt again, that will be a huge accomplishment that you can feel proud of to go into 2018.

Build an Emergency Fund

If you had unexpected medical bills, or had to fix your car, or replace a home appliance, how would you pay for a few thousand dollars right now?  Probably put it on a credit card since you don’t have the money now and then begin paying back each month, with interest, getting back into debt.  If you are able to set aside a few months’ worth of expenses to have in an account to act as a cushion, you can then focus on other areas of your personal finance without worrying about how you would pay for unexpected charges if they were to come about.

Increase Retirement Contributions

Last, but certainly not least, but may give your least focus because it seems so far away, but once you are able to settle up these other areas of your personal finance, it’s really time to increase contributions to your retirement account.  If you employer offers matching 401k contributions you should at least max that out, otherwise that would be leaving free money on the table that would have grown substantially over time.  From there, you can gradually increase each year to feel less of a burden, while still improving your future retirement outlook.

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