When it comes to financial resolutions for the New Year, nothing can be more empowering than gaining control of your money. Less owed and more saved in the New Year brings peace of mind, according to WalletHub.
But holding to a resolution is easier said than done. While about 80% of Americans plan to make New Year’s resolutions for 2020, WalletHub says that fewer than 50% succeed in keeping them for a full year. As many as seven out of 10 people admit to having cheated on a past New Year’s resolution.
Despite those odds, WalletHub has suggestions on how to make financial resolutions for the New Year without breaking them.
Here, in ascending order, are WalletHub’s top 10 financial resolutions for 2020.
10. Get an “A” in wallet literacy.
In 2019, less than half of all Americans (45%) graded their financial literacy at a “C” or lower, and that’s an improvement over 2013, when it was 40%. WalletHub invites you to take its online quiz to determine your weaknesses and improve them until you score at least an “A-“ by 2021.
9. Focus on your physical health.
The average person spends about $4,968 on health care each year, not to mention that money is also one of our biggest sources of stress. People who get regular exercise tend to have better credit scores, so good physical health promotes good fiscal health.
8. Improve your credit score by 20 points.
Less than 1.6% of people have credit scores of 850, the highest possible, and fewer than one in five have a credit score above 800. In fact, the average credit score is 683. If you fall in the latter category, you can improve your score just by maintaining an open credit card account in good standing.
7. Sign up for credit monitoring.
Since as many as one in four people have an error on their credit reports, reviewing yours on a regular basis will allow you to spot signs of fraud before they get too serious.
6. Look for a better job.
Spending less and saving more is not the only solution to your financial problems; a better-paying job is a good alternative. However, you may have to return to school for further education or to gain new skills, then move elsewhere to reduce your cost of living as you gain experience in a new field.
5. Use different credit cards for everyday purchases and debt.
If you must charge for things such as gas or groceries, use a rewards credit card. But for major purchases with balances you intend to carry from month to month, get a 0% APR card. If you incur interest on your everyday purchases card, you’ll know you’ve spent too much that month.
4. Make a realistic budget and stick to It.
To make a budget, gather your bills from the past few months and list all your recurring expenses, ranking them in order of importance. After that, cut the least important ones from the bottom of your list until your take-home pay exceeds what you plan to spend. Monitor monthly.
3. Pay bills right after receiving your paycheck.
Taking care of monthly obligations before indulging in luxury expenses is a helpful budgeting strategy. Set up automatic monthly payments from a deposit account: one for right after payday and another for a couple of days before your monthly due date to avoid paying interest on new purchases.
2. Add one month’s pay to your emergency fund.
People who do not have an emergency fund are tempting fate and putting themselves at risk of a financial catastrophe in the event of unexpected unemployment or major medical expenses. Protect yourself from such an occurrence by building a fund with about 12 to 18 months of take-home pay.
1. Repay 20% of your credit card debt.
To get out of credit card debt, start small with a plan to pay off 20% of what you owe. That’s about $1,740 for the average household, with monthly payments of $145 on a card offering 0% on balance transfers for at least 12 months. Use a credit card payoff calculator to crunch the numbers for your situation.
The full report can be viewed here.
