10 New Year Money Resolutions That Can Improve Your Finances in 2019
Setting up a New Year’s resolution is easy but committing to and following them is a different story. The new year is a chance to rejuvenate your finances especially if you didn’t do well this year. Having financial resolutions can be challenging but having a concrete plan in place and sticking to them can be rewarding. Here are 10 ways you can consider to get your money situation on the right track for next year and for a more financial savvy 2019.
Build a budget
Achieving your other financial goals will be nearly impossible if you don’t know where your money is going. That is why setting a budget is the important first step to take before you deal with your other financial goals. Before you create your own budget, you must consider tracking your spending to identify certain areas where you put your money to. There are a lot of smartphone apps that can aid you in tracking your spending. If you are able to track your spending then that’s the time to have a budget in place. A budget acts as a guideline on where to spend your money and prioritize the most important spending down to the least important one. However, you must always keep in mind that budgets are meant to be flexible. In case you overspent in an area, consider cutting back on other expenses to balance out your budget.
Start to establish an Emergency Fund
If you don’t have emergency fund yet, then starting one will be a good way to start the new year. An emergency fund is a separate savings account that is dedicated for unforeseen outflows of cash for unexpected events like job loss, illness, accidents, etc. Having an emergency fund gives you another layer of confidence to face the unknown in case it hits you suddenly. As you cannot tell what will tomorrow bring in terms of your finances, it really pays to be prepared by having your emergency fund in place. Some financial gurus suggest that your emergency fund should be at least six months’ worth of expenses but those starting from scratch can start small. However, if you still have outstanding debt, you might want to deal with it first to eliminate those costly interest payments.
Start the new year with a clean slate by being debt-free — or at least, reduce most of your debts. Debt is one of the major roadblocks towards financial freedom. So if you owe anyone — family, friends, colleagues, credit card companies, etc. — it is now the best time to settle all your dues. Generally, it is important to deal with the most expensive debts which are often likely to be credit cards since it will likely have the highest interest rate. It is also wise to deal with the smaller debt amounts first as it gives you added confidence as you cross them off on your debt list and leaves you to focus on more problematic debt issues.
Save an achievable amount
Setting up a realistic financial goal and a realistic approach will help you in achieving your goal. Having this approach lessens the possibility of discouragement and the likelihood of giving up if you have a lower goal. Bear in mind that starting small is better than not starting at all. Start to save little first as a start and review your progress from time to time. If you happened to have spare money then set aside it to your savings, too, so you can achieve your goal faster.
Know your financial goals
Before you make advancement on any of your financial goals, make sure to identify first what they are. Having financial goals makes it easier for you to be motivated as you are saving towards something specific. Ask yourself on what your financial goals are and then outline the best way to achieve it. If, for example, you want to pay off your debts for 2019, then consider listing down all your debts and plan on how to settle them. If you want to build an emergency fund for 2019, then it might be good to put your money in a separate savings account. Remember that being specific with your goals increases your chances of success.
Cut back on bad money habits
Let’s face it — bad money habits hinders us from having financial independence. If you want to have a financial free lifestyle, consider cutting down or eradicating bad financial habits. First, identify what your bad financial habits are — shopping every pay day, eating out too often, etc. Once you identified what these habits are, make a pact to eradicate them this year. Get a help from a trusted friend or your significant other to support you in eliminating these habits. Do keep in mind that breaking your financial habits doesn’t happen overnight. In case you stumble on the process of eliminating them, don’t give up but instead, try harder. You can also consider challenging yourself in order for you be more motivated in eliminating these bad habits.
Start good money habits
Once you succeeded in eliminating those bad financial habits, then it is now time to start having a good money habits. Take time to reflect on what are those bad money habits you used to have and try to transform them into a good money habit. For example, if you used to do a lot of shopping during pay day, then consider to save that money you used to spend on shopping instead of splurging it on items you don’t really need. If you have accumulated debts before, then one good money habit to get out of debt and start paying them. The ultimate goal is to start a good habit and make it consistent as possible.
Start reading personal finance books
Managing your own money can be a tough task especially when you are blinded by the fundamentals of proper money handling. That is why it helps to have a good background on personal finance as it is one of the foundations of financial success. Nowadays, there are a lot of financial books that can help you to be more educated in terms of proper money handling. Filipino authors such as Bo Sanchez, Chinkee Tan, Larry Gamboa, Randell Tiongson, etc. have well-written personal finance books that all Filipinos can relate to. Their books teach you on how to be better in handling your personal finances which includes the basics of budgeting, getting out of debt and growing your money through investments. It will definitely help you in proper money handling and can gear you up towards your best financial future.
Learn to save
Learning to save is easier said than done. In reality, saving money takes a lot of discipline and hard work — and it doesn’t happened overnight. As mentioned earlier, starting small is better than not starting at all. If you want to learn how to save money, start first with a small amount that you can achieve and increase the amount you save as you go along. Also, start tracking your expenses to see on where your money is going — which will help you identify the areas you overspent and know where to deduct your expenses. Be patient with saving money as it can be a lengthy and involved process especially for those who haven’t had much experience. As long as you stick with your plan of saving money, you are on the right track and who knows, you are already saving big amounts without you even realize.
Find ways to generate extra income
Having an extra income can be a wonderful new year financial resolution. Start your 2019 right by earning some extra income. One way to earn extra is to sell the items you no longer use online. You can either post it on your personal social media page or websites such as OLX.ph. You can also sell cookies you personally baked to your friends and families or do a buy and selling type of business to your friends. There are numerous ways to earn nowadays especially with the presence of the internet — you just have to be creative and do the thing that you would like to do most (e.g. baking cakes) so you won’t feel that you are working at all. Earning extra pesos a month can be a big help to achieve your financial goals like saving up emergency fund, paying of debt or saving up for a home.