Every January, throngs of New Year’s Resolutioners swarm gyms and physical fitness facilities across the nation. Doesn't it make sense to pay as much attention to your financial fitness as you do to working off that extra weight and getting healthier? Here are some worthy resolutions for the New Year to improve your financial standing in 2021.
If the thought of budgeting gives you the blues, think about it in its simplest form. It really comes down to keeping track of three simple things:
Find yourself a tool that you actually like to use to keep track of these three things, and you're set. Go old-school with a pen and paper method or a simple spreadsheet, or try a budgeting app like Mint or EveryDollar to help.
Once you know how you're spending your money, you can set goals and tweak your spending to meet them. To be fully aware of where you stand financially, you can calculate your net worth every year. Simply add up the value of the assets that you own and subtract the total amount that you owe.
The first step toward debt relief is to acknowledge that you have a problem with debt. Once you are past the stage of denial, you are in a position to draw up a plan and to begin getting rid of debt for good.
You may not be an investment buff right now or possess the financial know-how to invest profitably. Make it your objective to change that state of affairs. Do not let the end of 2021 find you in the same position.
Learning how to invest may take time, and you may have to turn to an advisor to get it going, but investing intelligently is the fastest way to build wealth. So, invest the time in becoming financially literate so you can invest your money prudently.
Once you can save money, working out a good investment mix should be one of your priorities. Do not get married to an asset or an asset class. Diversify across asset classes and monitor the performance of your portfolio. Do not be shy about making changes if needed.
Starting an emergency fund is as important for your financial health as debt relief. An emergency fund will help you stay out of debt by allowing you to cover unexpected expenses without the use of your credit cards.
Set up a savings account and start contributing to it regularly. Set an achievable goal for your emergency fund. Once you reach it, you will feel safer, less stressed, and more motivated to save up for investment purposes.
Calculate your monthly expenses and size your emergency fund so that it covers at least three to six months of living expenses.
When you are in debt, your future does not belong to you. When you get out of debt, you reclaim it. By setting up a retirement account, you invest in your future.
When you are young, even thinking about retirement may seem ridiculous, but it is one of the wisest things you can do financially. Find out if your employer offers a 401(k). If you are self-employed, an Individual Retirement Account (IRA) is an option you should consider.
Another way to invest in your future is to get out of debt today and stay out. ClearOne Advantage can help. Get a free savings estimate today.