Traditionally, every holiday season we remind ourselves to be thankful for what we have, as well as sit ourselves down to decide what actions (e.g. resolutions) we will plan to take in the new year. The problem is… most resolutions never seem to materialize and we simply continue to live within our perceived comfort zones. But what if, you could change your life for the better and all you had to do was commit to changing the way you perceive and manage your finances? Imagine what your life could look like if you had simply sat down and mapped out a personal finance blueprint on January 1.
10 New Year's Resolutions to Help You Achieve Financial Freedom:
- Create a Monthly Budget – Let’s face it, no one likes to sit down and count their pennies, but the ones that do have the highest probability of reaching their financial goals. All you need to do is sit down and track your monthly expenses and once you see just how your hard-earned money is being spent, you can create a household budget and re-direct your additional income to your savings or retirement account(s). A great tool to help you track your expenses and budgets is Intuit’s Mint.com website and app.
- Take Inventory of your Bad Debt: – You need to review all your loans and interest-bearing credit accounts by prioritizing them from highest to lowest interest. Each month not only are you paying minimum balances against your bad debt, but you are also paying compounding interest on those outstanding balances as well. Make a resolution this year to pay off more than the minimum due each month on your loans or credit balances, paying those with the highest interest rates first so you can re-direct those interest fees toward paying off other bills, or even better, increasing your savings or retirement account(s).
- Create a 2023 Financial Calendar – There is nothing worse than being charged late fees on top of interest. Make a point of identifying the dates that all your expenses are due and make sure to pay them in plenty of time to avoid any unnecessary fees. You should also use your financial calendar to help you determine how and when you will be paying off your highest interest-bearing balances: A month, a quarter, or a year?
- Create a Financial Route – We all live very busy and hectic lives, but it is extremely important that you put aside at least one hour a week to review all your finances. Ideally, you should do this with your spouse, partner or significant other. The more you work as a team and hold each other accountable, the faster you will reach your overall financial goals.
- Budget 10% of Your Monthly Income Toward Savings – Imagine when you were very young and a wise parent or grandparent told you that if you saved $.20 out of every dollar you earned for the rest of your life, you could retire at an earlier age, and you could enjoy your financial freedom. Sadly, if you never received this sage advice you must take it upon yourself now to set aside at least 10% of your monthly income toward your emergency fund, savings or retirement account(s) so you too can one day reap your own financial freedom.
- Turn Your Dream Board Into an Action Board – To help you plan and reach your financial goals sooner, you need to take action NOW! A simple way to accomplish your dreams is by attaching dates underneath your dream board photos. This simple change will create the urgency you need to get off your butt and take action toward achieving your financial goals. Remember, dreams are for bedtime, goals are for success.
- Manage Your Net Worth - To help you calculate your net worth, you must first take an inventory of all your assets (cash, investments, real estate, collectibles, patents/licenses) and your liabilities (your outstanding balances: mortgage, car loan, credit card debt, etc.). You current net worth (positive or negative) is determined by subtracting your liabilities from your assets. If the value of all your assets is greater than the total of your liabilities (e.g. debt), you have a positive net worth. Your long-term financial goal should be to have a large enough positive net worth that you can live off your assets. Make a resolution this year that you will do what is necessary to achieve a positive net worth.
- Become a Strategic, Not Emotional Spender – Before you begin doling out your hard-earned cash on the next “must have” product or service, ask yourself the following strategic question: “How will this product or service contribute to my personal finance goals?” You should never emotionally spend money without first researching and asking yourself “why you need this product or service in the first place?” Emotional spending to alleviate some emotional void in your life is never a wise idea. Make a point this year to cut out any unnecessary spending and re-direct that same money to your savings or retirement account(s).
- Earning More Money is Not an Excuse to Spend More Money – Just because you get some extra zeros at the end of your paycheck, does not mean that you should add extra zeros to your debt. So many people talk themselves into believing that if they just earned or got more money in their life that would solve all their financial problems. But the reality is… unless you have a plan to create good financial savings and spending habits, you will just continue to spend more and more, getting yourself into even great financial debt.
- Change Your Limiting Beliefs About Money – Most importantly, you need to stop listening to your own limiting beliefs about money. The only reason you are broke is because your life is broken. You have to start telling yourself, “You can save money!” “You can be wealthy and have financial freedom!” The only one holding you back from achieving your financial goals is YOU!
Make this the year you finally make your new personal finance resolutions come true!!
About the Author
OTA Contributor Team
Online Trading Academy's team of content contributors is comprised of our own instructors as well as many outside writers with specific, detailed knowledge in their field of specialty.