Resolution time? Make finances your first priority

Kat Hnatyshyn

Kat Hnatyshyn

Work out, quit smoking, eat better, travel more: these resolutions, along with “better manage your finances”, are some of the most popular New Year’s resolutions. Making resolutions is the easy part, but sticking to them is always a challenge.

While some people might think New Years Resolutions are unnecessary, we better keep them for some, especially those involving checking and savings accounts. Check out my recommendations for financial resolutions that you can and should keep this year. These will definitely be much easier to follow than a new workout and a strict diet.

Rainy day

Whenever someone asks me for financial advice, I usually respond with a question: do you have an emergency fund? Far too many people don’t, and they usually don’t have a good answer to my second question either: why not?

If you don’t have one, start the new year by setting up a rainy or emergency day savings fund. Even if you start with just $ 5 in savings on each paycheck, it’s better to have something than nothing. I generally recommend having $ 1,000 in your emergency fund initially – and trying to keep at least $ 1,000 in that account at all times.

Ideally, you want to work to have six months of living expenses in some type of cash account. This will help you if you have anything from a car problem to a medical emergency.

Face your debt

Once you’ve established an emergency fund, it’s time to take note of your debts. Whether it’s credit card debt, student loans, or a mortgage, your debt won’t go down if you ignore it.

Look for ways to pay it off faster. Try cutting cable and streaming services or restricting your nights out on the town. Small changes in your lifestyle and the money you save by making those adjustments can make a huge difference in the amount of interest you ultimately pay over the life of your loans. If you can challenge yourself to change your routine now and cut back where you can, you’ll thank yourself in a year.

Make a new friend

Start the year by meeting with a financial planner. An annual meeting to make sure you are on track with your finances is a must. If you’ve never met a financial planner, it’s never too late to start. Also look for someone who has experience in investing, as this will help you envision long term savings and hopefully motivate you to start planning for your future. For as little as $ 50 in monthly contribution, you can start investing for your retirement. It is a resolution that you will be very happy to have kept.

Kat’s Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or looking after her little ones, is the director of CommunityAmerica Credit Union. For more financial discussions, visit http://communityamerica.com.

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