It’s a good idea to make financial resolutions whenever possible, but many individuals find it most manageable at the start of a new year. The foundations are always the same, no matter when you start. If you want to improve your financial situation, consider the following 10 suggestions.
1. Get Paid What You’re Worth and Spend Less Than You Earn
This first guideline may seem obvious, yet many people have trouble following it. Make sure you are aware of the market value of your skills, productivity, job responsibilities, and contribution to the company, as well as the internal and external rates for similar work. Being underpaid by as little as $1,000 per year can have a devastating impact over the course of a career.
If you spend more than you earn, it doesn’t matter how much money you make. Spending less is usually less of a challenge than earning more, and saving money can be accomplished by making a few small adjustments in various areas. And it doesn’t necessarily need major concessions.
2. Stick to a Budget
Creating a budget is a crucial step in your pursuit of financial success. After all, without a budget, it’s impossible to tell where your money is going. If you don’t track your spending and savings, it’s impossible to make progress toward your financial goals. Whether your annual income is several thousand or several hundred thousand dollars, you still need to create a budget.
3. Pay Off Credit Card Debt
Credit card debt is the single hurdle to getting ahead financially. When making a transaction, big or small, it’s easy to reach for a plastic card or a bank account number and forget that you’re actually exchanging real money. We may say we’ll pay off our credit card amount immediately, but in practice, we rarely do and wind up spending more more than we would have if we’d paid with cash.
4. Contribute to a Retirement Plan
You should put away money for retirement in a 401(k) or another employer-sponsored plan if one is available to you and you have the means to do so. To a certain extent, employers match employee contributions to 401(k) plans. Commonly, this is called a “match with an employer.” The Individual Retirement Account (IRA) is a good option if your company does not provide a pension plan.
5. Have a Savings Plan
You should always prioritize yourself financially. You will never have a healthy savings account or investments if you wait until you have satisfied all of your other financial commitments before seeing what is left over for saving. Make it a priority to save at least 5% of your income before covering other monthly outlays. In fact, it is preferable to arrange for a certain amount of money to be taken out of each paycheck and deposited into a savings account automatically.
6. Invest
It’s great if you can put money down in a savings account and a retirement account and still put some money into other things.
7. Maximize Your Employment Benefits
The monetary value of employee benefits like health insurance, dental insurance, vision insurance, and a 401(k) plan is substantial. You should take full advantage of any that lower your taxable income or direct spending.
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8. Review Your Insurance Coverages
Adding life and disability insurance to vehicle loans, purchasing a whole life policy when a term life policy would do, and purchasing life insurance when there are no dependants are just a few examples of the ways in which many people are persuaded to overpay for these products. However, if you want to ensure that your loved ones and their financial stability are taken care of in the event of your death or disability, you need to carry adequate insurance coverage.
9. Update Your Will
Only 33% of U.S. citizens had a will in 2021.
1 No matter how much or how little money or property you have, if you have dependents you need a will. DIY wills are possible with the help of programs like Nolo’s Quicken WillMaker if your circumstances are not too complex. Create a will to ensure the safety of your loved ones.
10. Keep Good Records
You may not be taking advantage of all of your income tax deductions and credits because you haven’t kept diligent records. Develop a routine now and use it all through the year. It’s considerably more convenient than rushing about at tax time and perhaps missing out on deductions you were entitled to.
Checking In
If you used the aforementioned checklist, how would you rate your performance? You should make it a goal to improve in at least six of the 10 areas if you aren’t already doing so. Pick one of the 10 categories and make it your mission to improve that aspect of your life.
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Frequently Asked Questions (FAQs)
Where Can You Get Financial Advice for Free?
Good investment advice is hard to come by for free, as financial advisors typically rely on fees to support themselves. It’s possible to get free help with your finances in other ways, too, especially if you’re on a tight budget. When filing your taxes, for instance, you can take advantage of the IRS Free File programme if your income is below $73,000 and you need assistance. 2 Free or low-cost debt counseling could be offered through a credit union or a local nonprofit group.
What’s the Best Way to Measure Financial Success?
Different ways exist for calculating economic prosperity, and the “optimal” one will rely on your personal goals and values. If your goal is financial security, you can evaluate your progress toward that goal by tracking your take-home earnings against your outgoings. While others want to increase their net worth by increasing their income and decreasing their expenses, respectively, each year. Financial measures, such as the return on equity, can also be used to assess the profitability of certain activities and projects (ROI).
Is a College Degree Necessary to Achieve Financial Success?
Financial success can be attained without pursuing further education. The data, however, show unequivocally that a greater education level leads to a higher income and a lower unemployment rate. Simply said, getting a college degree probably won’t guarantee your financial success, but it will increase your chances of doing so.
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