After a year like 2020, chances are financial resolutions or goals are probably top of mind for most people. With the right plan in place, you can stick to your financial resolutions and end the new year in a better place than you started it.
To help you get started, here are 10 financial resolutions to set, along with expert tips on how to keep them.
1) Refinance your mortgage – While the coronavirus pandemic has wreaked havoc on many parts of life this past year, it also has provided some opportunities. For example, you can now secure record-low mortgage rates, making this a prime time to refinance and lower your monthly payments. To determine what your best mortgage options are in today’s market, contact a One Link Mortgage Professional for a complimentary consultation.
2) Pay down credit card debt – If you have credit card debit, consider making it a goal to pay it off. There are a few approaches you can take, but two common strategies are: Paying off your highest debt first (the debt avalanche method), or paying off your smallest amount of debt first (the debt snowball method).
3) Can’t stick to a budget? Create a spending plan instead – If you’ve had trouble sticking to your budget in the past, consider ditching the traditional budgeting method and create a spending plan instead, said Loreen Gilbert, an experienced wealth management manager and president at WealthWise Financial Services.
A spending plan allows you to choose what you spend your money on instead of restricting yourself on what you can’t spend. Start by determining you monthly fixed income and then decide what spending categories are most important to you.
As a general rule of thumb, you should start with a necessity bucket, which likely includes semi-fixed expenses such as rent, utilities, groceries and funding your savings accounts. After you’ve identified how much you will need for those expenses, you can create other spending buckets, such as a fun bucket, that the remaining funds can go toward.
Money management apps like Mint are a good tool for keeping track of where your money is going. You can also find these tools on some banking apps as well.
4) Automate your savings – One of the easiest ways to build your savings is automating your contributions.
When you automate your savings, you won’t have to think about how much money you want to set aside each month or be tempted to put less into savings.
5) Start or expand an emergency fund – A Bankrate survey from June 2020 found that not having enough emergency savings was a top financial regret since the pandemic began. Bottom line: Don’t overlook your emergency fund.
In general, experts recommend saving three to six months of living expenses. Start by opening a separate and dedicated high-yield savings account.
After that, consider these four tips:
-Evaluate your spending and look for areas where you can save.
-Set a savings goal.
-Set up automatic contributions.
-Try to raise your contributions over time.
6) Boost your retirement savings – Saving for retirement is one of the most important aspects of a sound financial plan.
7) Invest more – If you already have an emergency savings account, you might consider setting up an investment account to invest for goals with specific time horizons, like early retirement or saving for a house. If you are just getting started, you may want to consider speaking to a financial advisor about your risk tolerance and ideal earnings.
8) Improve your credit score – Your credit score plays a critical role in determining whether you get access to financing and other financial services you need. By understanding what makes up your credit score and what areas you need to improve, you will be able to raise your score over time.
To increase your credit score, consider these four tips:
-Pay all bills on time and in full.
-Lower your credit utilization ratio.
-Check your credit score for any errors.
-Don’t apply for new accounts too often.
9) Update your beneficiaries – Have you experienced a life-changing situation recently? If so, your beneficiaries might be out of date. Review the beneficiary designation and make sure it reflects your current intentions.
10) Look for ways to boost your income – Sometimes, it is less about savings and cutting back and more about increasing your income.
There are many ways you can increase your revenue streams. Freelance work, for example, is great for those who have a specific skill to offer others. But there are also less technical side hustles, such as dog walking, to consider.
Additionally, if you have a bit more money up front, then you could consider investing in rental properties.
The bottom line is there are plenty of ways to passively increase your income – it’s just a matter of finding what works for you and your situation.
If you would like more information about how to improve your credit score or how a mortgage review could help you be financially successful in 2021, call 204-928-7722 and speak to one of our knowledgeable Winnipeg Mortgage Brokers.
Source: Liz Hund – Bankrate.com