When 2017 comes around, you might notice a lot of your friends hitting the gym for a new year’s resolution. While this isn’t a bad idea, you might consider doing something a little less conventional. Building smart money habits can be a great way to make 2017 a better year. Here’s a look at how to start.
5 Good Money Habits for Your New Year’s Resolution
- Create a budget: If you don’t already budget your finances, that’s where you should start. Take an honest look your expenses, and set specific rules for your future spending. You’ll be amazed what a little planning can do for your savings.
- Debt first, investments later: It’s easy to feel anxious about investing in your future, but keep in mind that interest rates on consumer debt can be brutal. If you have lots of credit card debt, there is no better investment than paying that down. If the debt is too large to handle, consider working with a professional to build a debt settlement plan or file for
- Build an emergency fund: When you first start saving, one thing you should consider is building an emergency fund. This is a lump sum of cash that you can fall back on if you have a surprise expense. Knowing your checkbook is ready for a possible car crash or doctor’s visit will relieve a lot of stress.
- Savings first, spending later: Most people approach savings as the last priority. They spend what they think they have to, and then if there is anything left over they put it into their savings. Instead, decide how much you can afford to save, put that money into your 401k, IRA or emergency fund, and then budget your spending around that commitment.
- Rewards help habits stick: As you work towards creating better financial habits, know that it can help to have a reward in mind. Plan a positive experience for yourself after you have achieved a major benchmark. For instance, commit to taking your kids to a theme park after you finally build that emergency fund you are working on. It will give you something to look forward to if the commitment becomes difficult.
You might not have a great financial history, but this is a new year. Take this opportunity to reset, build healthy routines and create a plan for a brighter financial future.
Julian, Crowder and Shuster is a firm of Texas bankruptcy lawyers who help their clients escape debt and find a brighter financial future.