To start 2012, many people will set New Year’s resolutions to better their finances. Starting is the easy part, to follow through on the resolutions you will need to make sure they are simplified and effective.
Employ these 3 tips to ensure your financial resolutions are a life long success.
1. Create a Spending Plan (Budget)
Nobody likes the word budget so think of budgeting more like a “spending plan.” Rather than spending money with no plan and wondering where it went, create a plan that tells your money where to go. This gives you more control over your money and also provides a lot of security and piece of mind.
“Beware of little expenses; a small leak will sink a great ship” – Ben Franklin
2. Pay Off Debt
If you have high interest debt (i.e. credit cards) be sure to allot for it in your spending plan. This type of debt steals your wealth so pay it off as soon as you can to avoid throwing money away. I recommend using the debt snowball method in one of two ways:
- Highest interest debt first – Arrange your debt snowball to pay off your debts in order from the highest interest rate to the lowest. This method saves the most money.
- Smallest to largest debt – Order debts from smallest to largest and pay them off in that order. This method focuses more on small wins to maintain motivation.
3. Invest and Save with Betterment
Once your spending plan is in place and you’re apportioning money toward debt be sure to set aside money for saving and investing. This is where Betterment helps simplify things for us. Create savings goals for things like vacations, emergencies, auto repair and maintenance, etc., and begin funding them automatically from your bank account each month. This type of “autopilot saving” is the only way to successfully save money. If you don’t do it automatically chances are you’ll save for a few months, quit when “something comes up,” and never start again. The simplicity of the Betterment system will help make you successful, all you have to do is use it!
Try Betterment now, they give a $25 bonus to all new accounts opened with at least $250.
Take these 3 important tips to heart as 2012 approaches and put yourself on a path to a financially fit future.