Forty-five percent of Americans decide to make New Year’s resolutions each January, according to research from the University of Scranton.
WalletHub’s editors have crafted the following list, written by John S. Kiernan, of the 10 Best Financial Resolutions for 2017, along with some helpful pointers for bringing them to fruition
Thoroughly Review Your Credit Report and Sign Up for Credit Monitoring
Thanks to the increased availability of free credit scores, most people have a good sense of their credit standing, but too few are familiar with the contents of their credit reports. As many as one in four people have a credit report containing an error that could affect their credit score, according to research by the Federal Trade Commission. Signing up for free credit monitoring will enable you to receive an instant notification anytime there is an important change to your credit report.
Pay Bills Right After Receiving Your Paycheck
Taking care of monthly obligations before allowing yourself to indulge in any luxury expenses is a helpful budgeting strategy, giving you a better sense of what you can truly afford and what you can’t. It also helps you avoid ever having a late payment reported to the major credit bureaus, which is one of the easiest ways to damage your credit score. The best way to ensure success is to set up automatic monthly payments from a deposit account.
Repay 20 percent of Your Credit Card Debt
The combination of a 0 percent balance transfer credit card and a well-crafted payment plan can help folks with at least “fair” credit save hundreds on finance charges while getting out of debt months sooner than they would otherwise. But considering that the average household with credit card debt will owe approximately $8,400 by the end of 2016, it will be difficult to reach debt freedom in one fell swoop. WalletHub recommends starting smaller by making a plan to transfer and pay off 20 percent of what you owe over the course of 2017. The sooner you can pay off what you owe, the better off your wallet will be.
Use Different Credit Cards for Everyday Purchases & Another for Debt
The Island Approach involves isolating unique financial needs on separate financial accounts. The most basic application of this strategy is using a rewards credit card for everyday purchases that you can repay in full by the end of the month and a 0 percent APR card for revolving debt. Doing so enables you to get the best possible terms on each card rather than settling for average terms on a single card. It will also help you reduce the cost of your debt, considering everyday purchases won’t be inflating your average daily balance.
Add One Month’s Pay to Your Emergency Fund
Roughly 54 percent of Americans do not have a rainy day fund, according to the Financial Industry Regulatory Authority. Folks who lack an emergency fund are merely tempting fate and putting themselves at risk of financial catastrophe. Building up some monetary reserves should therefore be one of the first orders of business for any financial makeover. WalletHub recommends building a fund with about 12 to 18 months’ take-home income by adding a month’s income to your savings over the next year.
Improve Your Credit Score by 20 Points
Less than 1 percent of people have perfect credit scores. And 20 points is an amount by which pretty much everyone can improve their scores. Credit-score improvement in turn has the potential to save us quite a lot of money, on everything from loans and lines of credit to insurance premiums and apartment rentals. The first step in the credit-improvement process should be to get your free credit report and review it for errors. Once you’ve confirmed that everything is accurate, you can begin shoring up the weak points in your score.
Get an A in Wallet Literacy
Financial literacy levels in this country are far too low. In fact, only 57 percent of U.S. adults are financially literate, according to a 2016 survey by Standard & Poor’s. That leaves us tied with Switzerland for 14th in the world, behind the likes of Canada, the United Kingdom and Singapore – just to name a few. What’s more, roughly 45 percent of Americans grade their financial know-how at a C or below, according to the National Foundation for Credit Counseling.
Focus on Your Physical Health
There is a clear connection between physical, emotional and financial health. For starters, the average person spends about $4,342 on health care each year, which represents nearly 8 percent of his or her total annual expenditures. Money is also our biggest sources of stress, according to the American Psychological Association. And people who get regular exercise tend to have better credit scores. This underscores the importance of not only getting your financial house in order, but also exercising regularly and engaging in other healthy practices.
Make a Realistic Budget and Stick to It
Only about 40 percent of adults have a budget, according to the National Foundation for Credit Counseling. The best way to make a budget is to gather your bills from the past few months and make a list of all your recurring expenses. Then rank them in order of importance, with true necessities such as housing, food and health care obviously taking the top spots. After that, you can simply cut from the bottom of your list until your take-home exceeds what you plan to spend. Finally, keep track of your ensuing monthly spending.
Look for a Better Job
Sometimes, we get so caught up in spending less and saving more that we forget to address the other side of the equation: how much we actually earn. But the benefits of finding a better-paying job could actually end up outweighing all your other financial maneuvering put together. Trading up career-wise isn’t necessarily as simple as scouring local job postings, however. You might need to consider moving in search of higher wages or a lower cost of living. Or you could go back to school to acquire skills that will add to your earning potential.