While it may not be most Americans’ first association with New Years, this is a perfect time to assess your financial situation and discover ways to become better off a year from now. Don’t let the holiday season pass you by without making resolutions that will improve your financial well-being and pave the way for a more affluent future. If you’re unsure where to begin, here are 5 personal finance resolutions that can significantly improve your economic situation.
1. Pay Down your Credit Card Debt
If you’re one of the millions of Americans who have thousands of dollars in credit card debt, then the New Year is a superb time to lower your balances. The average American with credit card debt now owes more than $15,000, and the country as a whole owes more than $700 billion on credit cards alone. Without making a concrete plan to lower your balance each month, you may find your interest payments spiking in the New Year. Even if you can’t pay off your balances in full, it’s critical that you at least make your minimum monthly payments.
2. Contribute to your Retirement Fund
It’s never too early to start saving for retirement. Even if you’re a twenty-something recent graduate working at an entry level job, you shouldn’t disregard saving for your retirement. Set aside a certain amount of money each month that goes directly into your retirement fund, and hold yourself to it. Even if it’s just a symbolic amount, it’s definitely a good idea to get into the habit of saving while you’re young. *If you don’t have a retirement account, then your first priority should be opening one.
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3. Improve your Credit Score
Considering how integral your credit score is to your financial wellbeing, it’s mind boggling how many Americans don’t bother taking a look at their credit reports. Your credit score can have a tremendous impact on some of the most important financial decisions of your life, including your mortgage rate, credit card terms, and car loan availability. The New Year is a great time to learn more about how you can begin improving your credit score and gain the benefits of having excellent credit.
4. Review your Life Insurance Policy
As you proceed through life, it’s crucial to start paying more attention to your life insurance in order to ensure that your loved ones are protected if something happens to you. Depending on your needs, you should adjust your life insurance policy to make sure that you have the coverage you need, and the New Year is an ideal time to review your current policy.
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5. Take Care of your Taxes Early
Benjamin Franklin famously said that the only two certainties in life are “death and taxes,” so you might as well get an early start on your returns this year. Rather than waiting for the last minute which can lead you to miss deductions as well as costly penalties, take care of your tax returns long before the final deadline. Whether you’re filling out your forms online or through a professional, try to get it done within the first few months of the year.