Almost 70 percent of surveyed people plan to make New Year’s resolutions for 2018, according to online polling group YouGov.
Spending less money was in a three-way tie for most popular New Year goals, along with eating better and exercising more, with 37 percent of people hoping to keep more money in their bank accounts. Also in the top ten, 14 percent reported getting a new job as a goal for the year.
Having good intentions to improve finances is fine and well, said Harold Evensky, a certified financial planner and professor of practice in the Texas Tech Department of Personal Financial Planning, but goals without action do not do much good.
“Don’t resolve, do,” Evensky said. “Resolutions are nice, but they’re worthless if they just sit there and stare at you. If you’re serious about it, you need to get into the nitty gritty.”
Evensky suggested starting by analyzing cash flow, figuring out where you may be overspending or spending inefficiently. He said a balance sheet can help organize assets.
“That gives you a good baseline of where your financial life is today,” Evensky said.
Jill Gonzalez, an analyst with the financial website WalletHub, said in an email that a simple way to begin improving finances is by knowing where your money is going, being aware of your spending obligations and habits.
“A good first step to get your finances in order is to gather your bills from the past few months, not all of 2017, and then to make a list of your recurring expenses,” Gonzalez advised. “Rank them in order of importance, with obvious necessities like housing, food and healthcare at the top. After that, simply cut from the bottom of that list until your take-home income is more than what you plan on spending.”
This can help people stay on track with bills as well. In the new year, WalletHub suggests paying bills right after receiving your paycheck. Setting up two automatic monthly payments, one right after pay day and another before your monthly payment is due, can help avoid paying interest fees and improve your credit.
WalletHub suggests getting your credit under control is one of the best financial goals to make. Less than 1 percent of people have a perfect credit score of 850, according to WalletHub, with the average score being 679.
Signing up for credit monitoring, through a third-party service like WalletHub or through your credit card company, can alert you of changes to your score.
Using credit cards strategically through what WalletHub calls the island method, such as using a rewards card for every day purchases and a low APR card for larger balances that could sit longer. Gonzalez said credit methods like this can significantly reduce debt within a year.
Evensky and Gonzalez said everyone should consider making a financial-related resolution.
“Anyone and everyone should make some type of financial resolution this year,” Gonzalez said.
“If it’s not saving, it can be reducing your credit-card debt by 20 percent or delegating debts by using the Island approach. If it’s not spending responsibly, it can be working toward creating an emergency fund of a month’s worth of take-home pay. There’s always something to work toward to better your financial health.”
Evensky said working on your financial health is one resolution that could pay off well into the future.
“Think about the consequences of not doing it when it comes to your finances,” Evensky said. “Down the road, when you’re thinking about retiring, and you find out you can’t retire. Or when you do retire, you find you can’t afford to do the things you wanted. You have to frame it for reality. If you don’t do it, the consequences are pretty awful.”