As we approach the beginning of a new year, now is the opportune time to reflect on your financial habits and set resolutions to improve your economic well-being. As we approach the beginning of a new year, now is the opportune time to reflect on your financial habits and set resolutions to improve your economic well-being. The key to success with behavioral changes is setting practical and feasible goals.
We’re here to help you identify little changes you can make that will lead to an overall increase in your financial well-being and help pave the way to a prosperous future.
Review Your Credit Report
There are many websites and apps that allow you to access your credit score. However, it’s essential to regularly review your full credit report and ensure it accurately reflects your accounts. If there are any errors in your report, it could drag down your credit score. Credit report mistakes are more common than you may think, including inaccurately reported late or missed payments, or even fraudulent accounts opened in your name. Regularly reviewing your credit report gives you a better shot at identifying and reporting fraudulent activity.
You can obtain a free copy of your credit report from each of the three main credit bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com.
Calculate Your Net Worth
Your net worth is a critical component of your overall financial health. To determine your net worth, subtract your liabilities (e.g., current loan balances) from your assets (e.g., financial accounts, investments, owned property).
Taking a close look at your assets and liabilities helps paint a clear picture of your financial health and can identify where you may need to make changes in your spending and savings habits. It provides a bird’s eye view of where you stand financially – giving you a simple means to gauge your financial moves in the new year.
Establish an Emergency Fund
An emergency fund is a crucial component of your financial health. It ensures you have money set aside to cover those unexpected expenses when life throws you a curveball. If you don’t already have an emergency fund established, make it a priority for the coming year. If you already have one, prioritize making consistent contributions to grow your balance.
Ideally, your emergency fund should equal three to six months’ worth of living expenses. But don’t worry; you don’t have to have that much in the account right away! Goals aren’t achieved overnight. By making consistent monthly deposits, your emergency fund will steadily grow throughout the coming year.
Prioritize Paying Down Debt
Even if you’re already taking steps to tackle your debt, the start of the year is an ideal time to refine your debt repayment strategy. If you took on more debt last year than you intended or haven’t paid down your balances as quickly as you would prefer, consider reassessing your strategy. By prioritizing debt repayment in the new year, you can clear your path to a brighter financial future.
Here are a few popular debt repayment strategies:
- Prioritize paying down the accounts with the highest interest rates first.
- Pay more than the minimum balance required monthly.
- Consolidate debt with a balance transfer or debt consolidation loan to lower interest costs and simplify the repayment process with a single monthly payment.
Ramp Up Your Investment Contributions
As the new year approaches, spend time reviewing your retirement and investment accounts. Simple moves that can greatly impact your savings include:
- Enrolling in payroll deductions or automatic transfers to put your savings on autopilot.
- Making the maximum contributions required to your company 401(k) to receive any employer contribution matches.
- Reworking your monthly budget to set aside more funds regularly. For example, instead of saving 10% of your monthly income, increase it to 12%. Gradual changes lead to significant results.
We’re Here to Help!
When it comes to keeping your New Year’s resolutions, financial or otherwise, remember that consistent efforts can have a tremendous impact. Rather than viewing your resolutions as obligations to uphold, instead embrace them as investments into your future well-being. By committing to creating and enforcing healthy habits this year, you are taking tangible steps toward achieving financial stability.
If you want to learn more about eliminating debt quicker or options to increase your savings, we’re ready to help. Please stop by any of our convenient branch locations or call 800-782-4899 to get started.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.