by Dave Rathmanner*
What if 2017 could be the year that you saved more money towards buying a home or another important financial goal? What if you finally paid off all your debt this year? Wouldn’t it be great to end 2017 in a better financial position than you started it in? If that sounds appealing, then you might want to make financial resolutions a priority in 2017. According to a new survey of 1,001 Americans who are working towards their financial goals this year, their top three financial resolutions were to save more money (52%), pay off debt (35%), and spend less money (11%).
If you have similar goals, here are some tips for how to achieve them.
Save More Money
Most of us would love to save more money - whether it's for a down payment on a house, our emergency fund, our retirement, our children's college fund, or something else. The problem is, however, that saving can be difficult. There are so many other things that we would rather spend our money on. Most of us end up at the end of the month with little in our bank accounts to put towards savings. That's why it's important to focus on saving first. You can do this easily by setting up an automatic transfer to your savings account.
Maximizing how much you save now is important. That’s because saving early is critical when it comes to reaching any financial goal. For example, the more you put away for your retirement when you're younger the less you'll have to put away overall since that money will have more time to grow.
Pay Off Debt
For those of us who have a considerable amount of debt, it's critical to focus on paying it off this year. The first thing you should do is take stock of your debt and see if you can reduce the amount of interest you’re paying.
If you have a significant amount of credit card debt, you might consider refinancing that debt at a lower interest-rate by taking out a debt consolidation loan or home equity line of credit (HELOC), or by using a balance transfer credit card in order to benefit from a low or 0% introductory interest rate.
If you have a significant amount of student loan debt, you’re also a prime candidate for saving money through refinance. Many student loan borrowers are paying more than they need to in interest. If you have good credit, a stable job, meet other eligibility criteria you can often refinance your student loans at a much lower interest rate and potentially save yourself thousands of dollars over the life of your loan or reduce your monthly payments.
Once you’ve refinanced your debt, you should create a plan for your debt repayment. Some people like to follow the debt snowball method where they focus on the debt which has the lowest balance and pay it off quickly. This allows them to get the positive reinforcement of completely paying off a debt. That can motivate some people to stay committed to their repayment plans.
Others like to use what's known as the debt avalanche method where they focus on paying off debt with the highest interest rate first. By doing so, they ensure that they pay the least amount of interest on their debt and because of this they are able to pay off their debt more quickly.
Spend Less Money
If you want to spend less money, it’s important to create a budget and track it. One of the best ways to do that is to use an app like Mint, which automatically tracks your expenses and shows you how much you’ve spent. You should also get creative at finding ways to save. For example, bringing your lunch to work could save you a considerable amount of money over the course of a year. You might also consider cancelling your cable subscription, or calling and seeing if you can get a discount. If you start looking for ways to save money in your everyday life – you’ll come up with some great ideas.
How to Succeed
You’ve made your resolutions, but you’re likely wondering what you can do to ensure your success. It’s important to check in on your progress throughout the year. Whether you have weekly, monthly, or quarterly check-ins, you should set time aside to see how far you’ve progressed and adjust your efforts.
Another way that you can ensure that you're successful, is to make your resolutions with your spouse. The previously mentioned financial resolution survey found that over 84% of people work with their spouse in order to create their financial resolutions and that those who did were more successful.
Whatever steps you take to achieve your goals, making financial resolutions is critical to ensuring that your net worth will be higher next year when you ring in 2018.
Dave Rathmanner is personal finance journalist covering credit, debt, saving, and even frugality. He is the VP of Content at LendEDU, a marketplace for student loans and refinancing. You can see more tips from him and his team here. Dave is not an employee of OpenInvest, and LendEDU is not affiliated with OpenInvest.