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If you’re looking to make a fresh start in the New Year, diet and exercise are often the usual culprits for revamping. However, another area of your life that you might think about getting lean and mean with is your finances. There are a few financial resolutions you can make this January that will leave you in a lot better shape when you find 2014 drawing to a close.
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Spend less than you earn. The most powerful thing you can do for your finances is spend less than you earn. Creating a gap between what you bring in and what goes out allows you to do something meaningful with your extra money, whether that is paying down debt, padding your cash savings or ramping up your retirement accounts.
Be purposeful with your money. You shouldn’t feel badly about spending money on things that are important to you. That said, make one of your financial resolutions to prioritize what is most important. Decide what those important things are and try to avoid spending on things that aren’t in line with your goals. If you love a morning latte, go for it. If you don’t, save those extra dollars for the summer trips you love taking with your family.
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Don’t just think about monthly payments. It’s easy to think about a new purchase, whether it be a new car or a bigger house, in terms of what it will cost you each month. However, it’s important to consider the entire purchase, including how much total interest you’ll be paying and how the debt you are taking on will impact your net worth and other goals. Remember, it’s far better to spend a few hundred dollars a month investing in your future than to spend it paying interest on purchases from your past.
Focus on yourself. It’s easy to get caught up in what your friends and family are doing or buying but that really shouldn’t impact how you spend your money. There will always be something else you could buy or another trip you could take but if it’s not something that’s very important to you and you’re just enamored with the idea because those around you are spending their money on it, it’s likely not the best use of your cash.
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Share the wealth. It’s understandable to be worried about your budget when times are tight but if you find that you have a bit of room in your budget, try not to forget that there are lot of others out there who could benefit from your generosity. Coming off the holiday season, it should be easy to remember that it really is better to give than to receive.