In every new year, you have the chance to make financial resolutions with a challenge. The challenge is to maintain the resolutions at any cost, throughout the year. Some of us win the challenge, some don’t. But with a solid plan in place, you can easily stick to them, and you’ll be glad you did.
To ring the bell in the new year 2019, let us consider these 6 most important financial resolutions and how you can successfully maintain them.
The new year will be the best time to start a proper budget. With a solid budget, you can track your money each month and analyze how much money you need to meet your daily expenses. This may help you to fulfill all of your other financial resolutions.
You can use a spreadsheet to create a budget plan. However, you may also use Mint.com where you don’t have to log in manually and add your transaction. Mint pulls in all your financial data from your bank accounts, loans, and credit cards automatically. You can access it by using your smartphone or tablet anytime, from anywhere.
Your total debts may include credit cards, utility bills, student loans, payday loans, car loans, medical debts, or mortgages. But most of us typically looking to pay off unsecured debts like credit card debt, utility bills, payday loans, medical debts, etc.
Getting rid of debts will be the most amazing thing in your life! A huge weight will be removed from your head once you pay them off. It’s very liberating and feels awesome when you have no debts and a mind-blowing credit score in your profile.
In today’s world, technology made our life so easy that by using an smartphone app you can easily spend a lot to buy any commodity or book any service through online transactions. You can buy your clothes, shoes, and even order services like food or transportation by clicking a simple cell phone app. This is what you need to avoid on a first priority basis. If you can’t control your spending, then you won’t be able to save money, and also can’t pay off your debts.
You may use a trick to control your spending habit. If you want to buy something, don’t buy it immediately. Make a list in your smartphone and add the item you want to buy. Give yourself a 15 day window to think. If 15 days later you still need to buy the thing, buy it without fail. But if 15 days later you feel the opposite and do not want to spend money on that thing, remove the item from your list.
Overspending money is a bad habit and you must avoid it at any cost. Your should always try to develop good spending habits like buying only essential things for your home, always make a list before buying things, getting homemade meals instead of having lunch in an expensive hotel, etc.
As per the recent Bankrate survey, conducted this year, only 39% of Americans are able to pay an unexpected $1,000 expense by using their savings fund. Even worse, the Federal Reserve found the fact that 40% of Americans even can’t bear a $400 emergency expense.
Without having a proper emergency fund, most of the Americans are incurring debts while covering unexpected costs.
You need to take some immediate measures to stop this from happening with you. You should set up automatic transfers from your paychecks to your savings account every month. This way you can create a good emergency gradually, and you won’t be tempted to spend it rather than saving it.
Experts recommend we should save at least 6 months’ worth of expenses saved in emergency fund. So, consider slicing down your paycheck before you start spending, and list it as a new year financial resolution.
Do you check your credit score on a regular basis? No!! Then it is the first thing you list as a financial resolution.
Your credit score is an important financial factor which reflects your financial credibility to the lenders and creditors. By considering your credit score they’ll have an idea about how healthy your finances are. Good credit scores range from 700-749, and scores of 750 and higher are considered excellent.
You must also concentrate on building a healthy credit score. I know it’ll take time like all other good things in our life. You just have to follow some easy steps on the path to good credit, like paying your bills on time and full, use your credit as low as possible, pay off your old debts as soon as possible, etc.
Saving for retirement is one of the most important financial goals that has to be taken care off seriously. For that reason, as a financial resolution you must also consider saving for retirement as soon as possible. So, you may follow these tips to build a decent retirement savings for your older days.
a. Initiate your 401(k) plan – Invest a % of your pretax income directly into your employee-sponsored 401(k) plan. Most companies may also contribute the same amount from their end.
b. Open or fund an individual retirement account (IRA) – If you don’t have access to an employee-sponsored plan, you may then opt for an IRA. It has similar tax benefits like a 401(k). The IRS have increased the contribution limits for IRAs and 401(k)s for the 2019 tax year, and also raised the income phaseout ranges for IRAs.
c. Opt for a Roth IRA or Roth 401(k) – You may not get immediate tax benefit in a Roth IRA or Roth 401(k). But you may become eligible for a tax-free income in retirement.
I think starting 2019 with these financial resolution will be enough for now. Start working on these financial aspects, you’ll gradually find out more things that you need to take care of. Keep your cool and work wisely.
It is the age-long truth that we all came empty-handed and we all will go empty-handed. What matters the most is what lies in between!
We are all meant to live in joy and happiness. That what makes us feel good! Makes us content!
Satisfaction, pleasure, happiness, is what we all search and thrive for! Our times are limited. It is now or never. Everything’s ‘happening’, not ‘happened’ neither ‘will happen’. So, live the present in complete harmony.
But there’s something weird in the middle of everything! People believe in possession instead of sharing!
Hence I came up with this topic that will try to explore what makes wealth so important – that we gotta fight hard to build it, while in the end we will possess nothing and say goodbye!
Why do we need money?
We can completely survive without money. But what will then value the hard work we do. The work that gives some productive output while utilizing the costliest of everything, ‘Time’!
We all need something in return! This world is a complete give and take! Hence to unify everything, we need money!
And everything’s worth a certain amount of money! Money has the purchasing power!
Hence money can technically buy anything that’s not an emotion and that lies under human jurisdiction!
We need a house to live, food to eat, water to drink, electricity to bring lights to nights, and so on!
We are all working for each other. Some plow the field, some sew clothes, someone’s supervising the turbines so that we never run out of electricity, and the list goes on and on.
So monetary wealth is important!
As you can very well see, if you are not a productive member of the society, you can never understand the worth of money.
Only those who have done something productive, have valued money!
Don’t expect to get your pair of jeans for free, the daily bread for free, or rather anything for free.
Do the hard work, walk the tough road, get paid, and buy what you want and desire!
So why build wealth when in the end you are dead and can’t have anything?
Because unless you have a pleasurable life, you won’t have a pleasurable death! A wise friend of mine said it’s better to die in a golden bed rather beside a sewage!
We want satisfaction and happiness. If we can’t claim anything on this earth as ours, then our reason to live is nil!
Hence don’t get carried away by this fact that “there’s no need for anything, as, in the end, it doesn’t really matter.”
Well, in the end probably it won’t matter, but as of now, it does matter!!
Your tools to build wealth?
Consider ample savings. Claim as much money as you can and make it rightfully yours. But obviously not via evil means.
Savings and investments are what you should do. If needed, switch to a better job that pays you well and that offers growth!
Have more income to experiment with more money! Your aim should be to build wealth that can compensate your daily needs, even if the market hits high rates of inflation, and you have no source of income!
Take seriously your retirement savings and always pay attention to what inflation can do to your money!
So, build wealth to live for the present and not for the future!
Build wealth even if in the end it doesn’t really matter!
When does an object increases in value, and when does it lose its price?! Is it easy to answer? Yes, it is!
Let’s get this clear. Anything that’s got a huge availability, or one that’s easy to found, doesn’t cost much. Anything that’s rare is costly.
Compare some random objects like Iron and Gold, Pebbles and Coals, Lions and Dogs, Chickens and Lambs, and so on.
Supply and availability is the very general idea that determines an object’s worth.
You can pretty well say that if pollution level keeps on rising the way it is right now, then probably after a few centuries, oxygen and water will become the costliest substances on this Earth. Pheewww!!!
That’s too much to take in, is it?
Here’s the answer; “Inflation” is not something that happens due to an external force. It’s us, the humans, who created currencies, divided lands, assigned values to objects, and hence suffer imbalances in what this world can offer! This imbalance between supply/availability, and demand/necessity is what we may call inflation.
As per economical terms, inflation is the rise of prices of any object, good, or commodity. Deflation, on the other hand, is just the opposite!
If by any chance next year, the farmers see a huge increase in jute cultivation, then prices of jute goodies will drop!
This is how the market works. It thrives on the availability and rarity of products!
What causes inflation?
Very difficult to say! There can be many factors. Natural calamities or disasters, civil war, lack of labors, low supply of products, a sudden increase in demand of a certain object, an abrupt increase in cash flow from reserve banks, and anything that creates a scarcity in an object’s supply or increases drastically the object’s demand!
Why can’t the reserve banks print more notes to fight inflation?
It’s not bad to think like that! I mean seriously, why can’t they just keep on pumping cash?
Well, there’s the problem. Most of the goods that we have, I mean those that have physical or economical existence (bonds, funds, etc.) are limited! On the other hand, the money we have will become endless!
Ultimately what happens is, you are left with extra money after purchasing a good and the money becomes useless! Or the product, you are after, increases in price, as there’s more demand since everyone’s after it because all have the cash!
That’s when inflation occurs!
But throughout the ages, as we know the poor is dominated and the rich get richer while the poor get poorer! That’s because, those who are smart enough to track inflation and those who have the money, buy extra commodities before the market hits inflation! It, in turn, increases the demand because more products are purchased and that results in an increase in the price of the product.
Now the poor can’t buy the product as they still don’t have the money. Plus the price of the product has also increased!!!
What to do then?!
Well, according to the words of Jim Morrison “We could plan a murder Or start a religion.”
What Inflation can do to your money?
Money itself has no intrinsic value. It’s worth something because we believe so! Else it can only be used to warm ourselves on a cold winter night by burning them!
No matter who says what inflation can’t be stopped! Our needs are increasing and the only thing that’s becoming cheap is technology! Rest everything is skyrocketing!
Believe it or not, inflation is going to take over you savings sometime soon, if you can’t find ways to increase your amounts!
But one relief is there that with huge rates of inflation, all forms of savings accounts receive higher interest rates!
Still, you can’t rely completely on that as there are exceptions and anomalies!
Yes, investment can only save you. Your money should always be working and be a part of the circulation. Hiding it underground will only get useless unless your money’s made of gold or silver or platinum!
The more it is a part of the circulation, the more is it influenced by the rise and fall of inflation!
Footnote: Don’t forget to consult a financial advisor and see what investment options are suitable for you! Also, savings accounts are a part of investments. Always keep one or more savings accounts open. This means bank accounts and not cash stashed under your pillow!
Sometimes the difficult thing of money saving habit is just how you can start the habit itself. It is really very difficult to find out easy ways to save money and how you can use your savings to reach your financial goals. So, let’s discuss few basic tips that can help you to develop a realistic money savings habit.
The first step would be figuring out the amount of your spending. Keep track of all your expenses. This may include the cost of newspaper, coffee/snacks, etc. After getting the data, categorize them according to their total amount. You can use your credit card or bank statements as reference.
Once you have the idea of your monthly spending limit, you can execute a budget and try to fit your expenses into it. Apart from your monthly expenses, you must also consider expenses that occur often but not regularly. These may include car maintenance cost, home renovation, etc.
After planning the budget, try to put away 10–15 % of your income as savings. If you save money every day as well as reduce your fixed monthly expenses, very soon you’ll be able to build up a good saving habit.
Try to set a goal. You need a specific target for which you’ll cut off expenses and save money. Figure out how much time you need to save for it. If you need help figuring out a time frame.
These are some examples of short- and long-term goals:
Short-term (1–3 years)
Long-term (4+ years)
If you’re saving money for your child’s higher education and your retirement fund, then you may invest your money in IRA or a 529 plan. These investments might come come with risks but they also give you good, compounded returns if you plan properly.
Almost all banks offer automated transfers between your checking and savings accounts. You should decide the time, the amount , and the account where you’ll transfer the money to. You can also divide your income between your checking and savings accounts. Automated transfers are a great way today to save money as you don’t have to twice about separating money into two accounts manually.
Check your progress every month. Keep eyes on your checking and savings account. This will not only help you to stick to your savings plan but it also helps you identify and fix problems quickly.
These easy tips to save money will be very helpful to you and will inspire you to build a good money saving habit.
Twenties is the right time to practice good financial habits. Because, at this age every one should prioritize their finance in order to make a smooth financial life. If you’ve a habit of spending more than what you earn, it would be really difficult for you to fight with debt. The major reason that people incur debt is because they don’t know how to live within their means. If you have a couple of credit cards in your hand and indulge into heavy shopping without thinking about future consequences, then you’re in trouble. Once you fall in debt, you’ll realize how difficult it is to get rid of it. It is better that you start building new habits to become a money saver. My article can give you some suggestions.
Financial habits you can build in your 20s
Here are the 11 habits that can help you stay financially independent not only in your 20s but throughout your life.
1. Set up a goal
You should have some reasons to save money. Think what do you want? A home, financial independence, getting rid of your student loan debt . Take your first step and achieve one by one. Your desire will inspire you to save money and thus you can build a good money habits as well.
2. Give yourself a deadline
Always fix a date by which you can meet your goal. This will give you a push to save money. Think about your goal once a day. Thus, you can avoid big expenses and stay within your budget.
3. Create budget and modify accordingly
Budgeting helps you spend less than what you earn. This helps you to save more as well. As you expend less and save more, you incur less debts and even if you do incur some, you’ll have the money to pay those off. You’ll have to make a list of your income and your expenditures in order to create a budget . A budgeting calculator can help you prepare your budget. If required, you’ll have to analyze and also modify the budget from time to time as per the changes in your income and your expenditures.
4. List items of your requirement
At the beginning of every week you should list the names of items you would require throughout the week. This list should only include items of necessity and not luxury. You should then visit the mall once a week to buy things you’ve written down in that list. You should remember to carry the list with whenever you go for shopping.
5. Use cash for shopping as much possible
One of the major reasons why young people get into debts is credit cards. When you’ve a credit card in your hand, you can barely resist the temptation of buying anything that catches your fancy without thinking whether or not you at all need it. Instead if you use cash for purchasing, you would not be able to spend much even if you want. This is because you cannot carry too much cash always.
6. Stay within your means
You’ll have to change your style of expenditure in order to save money. That is, you’ll have to become more disciplined and lower your expenditures as much as possible. In addition, lower the usage of credit cards as these incur higher debts.
7. Make a habit of using coupons
Coupons are a great way of saving money. You can collect coupons from newspapers, magazines and even some websites which allow you to download free coupons. Thus, you can use these coupons to buy items on discount. Talk to your parents or elderly persons to get some information about couponing.
8. Make your own food always
Eating out, ordering food or buying lunch can make your pocket considerably lighter. It is better you skip eating out except for those very rare occasions when you want to go for dinner in a restaurant to celebrate anything. You should also carry brown paper bag to office so that you don’t need to buy food.
9. Set up an automatic savings account
Set up an automatic savings account to avoid spending money on something else. You can ask your employer to directly deposit a certain amount of money from your salary into the savings account. Pay yourself before paying others. Start small with just 1%-2% of your salary. Once it becomes a habit, you’ll see how fast your money grows.
10. Fight with debt
You should work on your financial obligations as soon as possible. The sooner you pay off your debts, the quicker you can start saving money. Try to pay the high interest debts first. Try to fix your credit card and student loan debts now.
11. Give priority to your career
Take your job seriously because your profession will give you a smooth financial life at the age of 30. A good job is always a steady source of income. Work hard and acquire advanced skills in order to stay financially secure in the long run.
Try to learn more about banking, investing, handling finances and so on. Read journals and financial magazines. Visit good personal finance websites and follow financial market on TV channels. These all are good habits you can build in your 20s. Thus, you can discover your own ways to deal with money as well.