Wednesday, 4 January 2012 19:02
Many of the New Year’s resolutions people make involve money. That comes as no surprise, because money plays a major role in many aspects of our life. If you’d like to put your finances on more solid ground, consider these resolutions:
Control spending. It’s not just what you earn, it’s what you keep. However, most people worry more about how much they earn than what they spend. Develop a budget and look for ways you can spend less every week. You’ll be surprised how little things like that fancy cup of coffee can add up.
Save more money. Saving money accomplishes two things. First, it gives you a place to turn in case of an unexpected expense – or what your parents probably called saving for a “rainy day.” Second, saving and carefully investing money is the surest path to financial independence in the future. Think of making deposits to a savings account as “paying yourself first,” and do that before you pay a single bill.
Prepare for emergencies. Do you already have an emergency fund? Good for you! If not, open a savings account and start to put money into it. Your goal is to build up enough to cover three months’ worth of expenses. That way, if you lose your job, become ill, face a major car repair or find yourself in other situations, you’ll have money to help you.
Plan for retirement. Ask any senior citizen, and they’ll tell you life moves more quickly than you realize. Even if you’re fresh out of school, start putting a good chunk of your earnings away for your retirement. Don’t count on Social Security – use the power of compounding to grow your own money.
Use cash instead of credit. Credit cards are so easy to use that they encourage many people to buy more than they need. That’s especially true with impulse purchases. But credit card charges tend to pile up and catch up with you later. If you can afford to pay cash for something, do it. If not, think about whether you really need it, or save up to buy it later. That way, you won’t be afraid to check the mailbox.
Review your insurance. The time to discover that insurance coverage is inadequate is before you need it. You don’t want to have a house fire or auto accident and then learn that your coverage wasn’t as good as you thought.