Boy! It’s hard for me to believe that 2016 has almost come to an end. But it has. That makes now the time to be making financial resolutions for 2017. You could probably make many more than these eight but in our way of thinking these are the best ones you could make.
Resolve to stop piling up debt
If you make only one financial resolution for 2017 this should be it. Debt – especially credit card debt – is basically borrowing from tomorrow to pay for stuff you want today. We understand that when you see something you want but you don’t have the cash to pay for it it’s very tempting to pull out a little piece of plastic and buy it. However, debt can end up ruling your life.
CrediCards.com probably said it best, “Owing is easy, repaying is hard.” And credit cards can have interest rates as high as 17% or even 19%. If you charge up $6000 on a credit card at 17% because you just can’t resist that seven-day Caribbean cruise and you continually make just a minimum payment of $120 a month, it will take you 87 months to pay off that cruise or more than seven years. And this doesn’t even include any other of your credit card debts.
One of the best financial resolutions you can make next year is to prioritize your debts by their annual interest rates. Then do what you can to pay off those with the highest interest rates, whether it be credit card debts or a debt consolidation loan.
Resolve to start an IRA
If you’re not already contributing to an IRA, you need to open one. The two types are a Traditional and a Roth IRA. They are very similar except for one big difference. The money you contribute to a Traditional IRA is tax-exempt though you will be required to pay taxes on the money when you withdraw. A Roth IRA is the exact opposite. You pay taxes on the money you contribute to it but when you begin withdrawing from a Roth, the money is tax-exempt. Each also has limits as to how much you can contribute each year. Click on this link to learn more about these two types of IRAs and then get started and open one. An IRA is just a great way to build your retirement account.
Resolve to automate your saving
You can now enroll in an automatic savings plan for just about everything from government bonds to a brokerage account. All you need to do to is open a brokerage account and then have a set amount of money taken out of your savings or checking account each month, on a certain day, and then deposited into that account.
This is one of the great financial resolutions because saving automatically forces you to save on a regular basis because the money goes directly into your account before you even see it.
Resolve to close any unnecessary accounts
Do you really need several checking accounts, savings accounts or credit cards? You’re paying your bank or some other financial institution fees to keep all those different accounts open when you probably don’t really need them. To illustrate what this could mean if you have a checking account at a bank that charges you just eight dollars each month in 30 years that eight dollars will have grown to more than $8,500 after taxes! Wouldn’t you rather have that $8,500 in your retirement account?
Resolve to follow your passion
Life’s too short to stay in a humdrum job that provides little or no emotional satisfaction. Think about what it is that makes you feel truly passionate and then figure out a way to turn it into a hobby or a job. Is your passion video games? Believe it or not there is actually a job for videogame testers. There’s even a full-time job for ice cream testers. The important thing is to resolve that next year you’ll find a way to make money doing what it is you love.
Resolve to start giving money away
One of the best ways to learn the value of money is by giving it away. When you get your first paycheck in 2017 take 5% of your net take-home pay in cash. Then next time you walk into a Chick-fil-A or a Taco Bell use the money to pay for some of the other people in line anonymously. Or if you’re in a Walmart and see a kid staring at a battery-powered car, buy it for them. You can bet that the people that receive your “donation” will remember it for many years. This is one of the seven financial resolutions that will both give you a greater sense of financial freedom and you’ll be helping change other people’s lives for the better.
Resolve to start using personal finance software
Do you know how much you spent in 2016 on ATM bank fees or drive-through cappuccinos? We guess that your answer would be no. Resolve to get something like Quicken or Microsoft Money and use it to begin managing your personal finances. Come the end of 2017 we think you’ll be very happy that you made this number six of the financial resolutions.
A really good financial app, which is free, is Mint. It will track your spending and organize it into categories for you. Mint recently added a new feature called Mint Bills that will provide you with bill reminders and bill alerts.
Here’s a video with five people who blog about personal finance explaining why it’s important to use this software, which one they prefer and why they prefer it.
Resolve to read a book on finances each month
You can’t learn how to repair an engine without reading a book about engine repair. If you want to be a good cook, you need to read cookbooks. The same is true of finances. Reading books about finance – whether in hardback or online – allows you to tap into the minds of some of the smartest financial experts ever. Get a copy of One Up on Wall Street, The Intelligent Investor or Common Stocks and Uncommon Profits. These books will teach you how to create a portfolio and value your investments. If you’re really dedicated to the idea of creating long-term wealth than you need to consistently apply yourself to learning about financial market, investments in general and the nature of money … and it’s all there in books just waiting for you.