As the New Year is underway, now is the opportune time to reflect on your financial habits and set resolutions to improve your economic well-being. When making resolutions, we often set our sights too high, making living up to our expectations difficult. 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 this 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. 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. And if you are unsure where to start, use this Budget Coach to help guide you through.
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, 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
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.
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, please stop by any of our convenient branch locations or call 248-322-9800 extension 5 to get started.
© Genisys Credit Union and www.genisyscu.org, 2024. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content.