New Year resolutions, they usually consist of things like weight loss, exercise, or something like positive thinking. Yeah, boring… Well, being it’s February, let’s look at some new “resolutions” that could change our financial life for the better!
(1) Add $1,000 to your Emergency Fund.
Did you know that most American families do not have a minimum of $1,000 in liquid savings? In recent years the number has been estimated that 40% or less have access to $1,000 in case of an emergency. That number is staggering!
If you aren’t familiar with the idea of an emergency fund, here is a good place to start.
Having at least $1,000 in a savings account to pull from in case of an emergency is essential. For the 60+% of American’s out there without an emergency fund, they are left with placing an unnecessary burden on credit cards, left borrowing from predatory lenders (payday advances, car title loans, etc), or left to borrow from family members.
(2) Over this year, make an extra payment on your mortgage.
How many times a year do you get paid per year? If you get paid biweekly (26 paychecks a year), the option to make an extra mortgage payment a year is extremely easy. You will receive 2 extra paychecks per year. Take each of those extra checks and apply those funds to make half of your mortgage payment.
Don’t get paid biweekly? With proper financial planning and budgeting, it’s still possible to make an additional mortgage payment this year.
Paying an additional mortgage payment a year helps to pay down your mortgage quicker and reduces the amount of interest you will pay over the life of your loan.
(3) Make monthly contributions to your retirement account of any amount.
When it comes to retirement contributions, every dollar matters. Start small. The biggest challenge here is to start somewhere. Make a monthly habit of contributing something. A little something turns to something more. As you see those monthly contributions compound, encourage yourself to gradually put away more.
(4) Commit to 2 weeks of not shopping.
Can you do it? No shopping! No Amazon! No grocery store runs! No shopping at all for 2 weeks! Could you?
Did you know that most American families have at least a month’s worth of groceries in their pantries and freezers?
What’s the purpose? So much of our money spent on Amazon purchases, grocery stores, and big box stores are often unneeded and unnecessary. These 2 weeks should be spent evaluating your normal spending habits and doing a mindset reset on your shopping and spending.
(5) Liquidate $200 worth of excess items around your home.
Find unused items around your home and sell them. It helps both eliminate clutter from your home and helps to raise a little funding.
What kind of items can be sold? Check out our recent blog post, Money Finders, here.
What should this money be used for? Well, that depends on what your immediate needs are. You could use the money as part of your emergency fund. It could be used to jump-start your retirement account. It could also be used to help pay off debts to improve your credit score. It could be used as a charitable donation. Or to fund your investment account.
(6) Actively work on increasing your credit score.
Some people will tell you that your credit score doesn’t matter. You should pay for everything in cash. While those are all great things to strive for, the point is that your credit score is still important even if you only use cash.
So many items like car insurance rates are based on your credit score. To read more about our philosophy on credit, check out our blog post Credit Cards Are Not Your Enemy here.
(7) If both you and your partner work, work towards living on one partner’s income while saving the other’s income.
The goal: Living within our means. Saving more. Creating more memories. Having less “stuff” and more memories. Living a life we purposely design for ourselves.
Our family has been full-time RVers for the past 5 years. A life lived with minimal possessions, but full of experiences and wonderful memories.
One of the best ways to accomplish these goals is to live on one partner’s income while saving the other’s income. Please understand that this is not always easy and for most families can’t happen overnight. It is something that takes time and intentionality.
(8) Create a budget and stick to it.
Budget: A dirty little 6-letter word!
Budgeting really doesn’t have to be a dirty little word. Budgeting is simply all about planning where your money is going to be used and sticking to it.
Looking for our choice of budgeting software, try You Need A Budget!
Need help? Try our Budgeting Workshop.
(9) Invest monthly in the stock market.
Very much like adding money to your retirement account, investing in the stock market is something that starts very gradually. Start an investment account and begin adding money to it monthly.
The easiest way for this to take place is to have it automatically deducted from your paycheck or have an automatic deduction from your checking account to your investment account.
Your mindset going into this activity should not be a mindset of day trading, but a mindset of long-term investments.
(10) Give a recurring monthly donation to one charity.
Part of human nature makes us desire to be generous people. To help others in their times of need. Pick one charity that you truly believe in and become a monthly contributor. The amount at this point is not important. It could be as little as $5 a month. Again, it’s about making it a habit and doing good.
Are all of these decisions and resolutions possible overnight? They could be. It depends on your personal commitment level. Are all 10 feeling a little daunting? Start with 2 or 3.
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