The holidays are in full swing and the time to determine your New Year’s Resolution is here. This year, we want to help you be even smarter about your money management. Below, you’ll find five financial resolutions to make (and keep) in order to make 2014 your best year yet!
Track your spending
Spending smarter in 2014 might be easier than you think. One of the quickest changes you can make is to build a monthly budget and begin tracking your spending against it. We all lead busy lives, but keeping an eye on your finances is easier than ever. Online banking makes the process extremely simple, especially when you manage your spending through debit. You can log into your account and track all debit card purchases. It might sound like a small change, but keeping up with your spending and mapping that activity back to a pre-determined budget is a great way to prevent overspending
Pay down your debt
An important part of managing debt is developing a plan to prioritize which debts to pay off first. Take a look at the interest rates associated with each of your loans or credit cards. While it’s important to pay down as much debt as possible, prioritize the amounts with the highest interest rates. You’ll pay less money over time if you pay off these debts first.
Take the time to choose the right financial institution for you. While the decision doesn’t have to be a permanent one, you will work with your financial institution frequently and switching providers after you’re settled in can be a pain. First, make sure your bank or credit union is insured, which guarantees deposits up to $250,000. Then shop around and explore the benefits of each of the institutions you’re considering. Does it offer a free checking account and low fees? Convenient branch locations and online and mobile banking? Will you have access to a debit card ? These are important questions that could save you money in the future.
Contribute more to your savings account – a classic New Year’s resolution. We know, it’s easier said than done. You know the basics. Decide on a percentage of your paycheck that you feel comfortable contributing to savings each month – 10% of your gross pay (your paycheck before deductions) is the standard recommendation. Also, plan for short-term savings (e.g., three months living expenses). It’s great to save for long-term goals like retirement or a down payment on your first home, but it’s also good to have readily accessible cash stashed away if you lose your job, your car breaks down, or you incur a medical expense. Building an emergency fund will help you be prepared for whatever the New Year brings.
Learn your credit score
If you don’t know what your FICO® Score is – or know what a FICO Score is – find out fast. Your credit score can determine your ability to get a home mortgage, buy a car, start a business or even find a job (employers routinely conduct credit checks). Credit reporting bureaus run your credit history through a formula to generate a credit score – the number lenders review when you apply for any kind of loan.
In addition to learning your existing score, do some research to understand what factors affect your score and how you can improve your rating over time. Paying down your debt, paying your bills on time and using your credit cards prudently are all great ways to build your credit score. Conversely, delinquent debts, bankruptcy or even identity theft can wreck your score. Consider your credit score as a key vital sign of your financial health – monitor it regularly.