Financial New Year’s Resolution
It’s New Year’s Resolution time again. It seems that most people focus on diet and exercise for their New Year’s Resolution. In this blog, however, I’m going to give you 3 simple and easy to implement exercises that can greatly improve your financial life in the year ahead.
Commit to a realistic budget. A budget is simply a monthly spending plan. You sit down at the beginning of the month and spend every single penny that comes in. You allocate money to things like savings, investing, groceries, utilities, fuel, clothing, travel, etc. Any leftover money is either added to your savings or investing line items or can be allocated to things like debt reduction. When I did my first budget, I was opposed to it because I made frequent stops at the ATM to take out “walking around money”. I felt that the budget would handcuff me and I didn’t want to commit. After a few weeks, however, I was a believer. I received a monthly allowance in an envelope titled, “Nick’s Fun Money”. As part of our monthly spending plan, we allocated money to discretionary spending. I found that the envelope helped me to be more disciplined in my spending and I frequently had money at the end of the month. For those who don’t know where their money is spent, a budget is a must!
Monitor your credit report. It seems that there are data breaches reported in the news on a weekly basis. As I write this, we are fresh off a news cycle where Russia was blamed for a huge hacking operation targeting American companies. Also, in December 2020, a large cybersecurity company, Fire Eye, was hacked. In 2021, monitoring your credit report is a must. Better yet, it’s a quick and easy process. Equifax, Experian and LifeLock are companies that monitor your credit profile and provide updates if there is an attempt to steal your information. Most of these services cost approximately $20 per month which, in my opinion, is a great deal for the protection provided.
Maximize Credit Card Rewards. If you’re good at handling debt (pay your bills off every month), taking advantage of credit card rewards can be a useful tool. For example, several years ago I was talking with a client and he had just purchased roundtrip, first class tickets to Hawaii that were paid for with credit card rewards. The most popular benefits offered include cash back offers, discounts at retailers and airline tickets. There are even online card reward calculators like the one found at cardbenefit.com/credit-card-rewards-calculator.
There are plenty of other Financial New Year’s Resolutions you can consider but these three resonated with me because they’re easy to implement.
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