Getting finances on track is a worthwhile New Year’s resolution. Don’t feel discouraged by other resolutions that haven’t worked out—as Time reports, research finds that financial resolutions are easier to follow through on than other popular resolutions like those involving health. Of the people who made financial resolutions for 2014, 73 percent were able to make at least half of the progress they wanted.
Deciding to get your finances on track is the first step. Next, you need to look at your financial situation.
Assess Your Finances
Take a look at the financial ups and downs you experienced in 2014. How much did you earn? Did you pay down some of your debt or invest money for retirement? On the spending side, consider whether your living expenses changed during the year and whether you made any large purchases. Also note if you incurred new debts.
Once you’ve listed the notable financial events and features of the previous year, think about how you expect 2015 to compare. For example, you might plan on your income being higher if you got a raise or took on extra part-time work. If your family has grown, you probably expect to have higher health costs and to spend more on food and clothing. These predictions should give you an idea of if you have enough leeway in your budget to pay off debt faster or increase your savings, or if you need to find ways to cut costs as you work on getting finances on track.
Set a Savings Goal
Based on what you saved last year and your predictions for 2015, set a goal for how much you want to save in the coming year. If you saved a portion of your income each month in 2014 and predict stable expenses into 2015, you may want to continue saving that same amount or to save at a higher rate. Starting or reestablishing a small emergency fund is a more attainable savings goal if you’ve recently dealt with financial difficulties from high debt expenses or job loss.
Rank your expenses for 2015 in order of importance. At the top of your list should be items like rent that you must pay no matter what. Further down, note optional items like entertainment, eating in restaurants, and replacing old but functional appliances or furniture. At the top of your list are your spending priorities; at the bottom are expenses you can trim when necessary to make room for debt payments or savings. Set a goal to cut some of these optional expenses and to use the money you free up to pay off debt or to save.
Talk to a Credit Counselor
Bring the information about your 2014 finances and your expectations and goals for 2015 to a nonprofit credit counselor. Your counselor will help you budget for your 2015 expenses and will suggest ways to reach your savings goals. If you have debt, your counselor may recommend that you enroll in a debt management program. This program will make it easier to pay off your debt and may even reduce your interest and fees.
The start of the year is an ideal time to take stock of your finances and set goals to work toward in the next twelve months. With planning and perseverance, 2015 can be the year you take control of your finances.
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