This post came in a little late, I know. Life got in the way, but better late than never, right?
2013 is here, and what may have been the biggest holiday spending for 2012 is over. Most folks, correct me if I’m wrong, are probably seeing an unhealthy savings account balance right at this very minute. Or worse, a whopping credit card balance to pay off for the next months or so.
And since the New Year is all about taking a look back at the year that just closed and assessing what worked and what needs some changing, or if you’re up to it, creating resolutions that are hopefully NOT outrageous but SMART (Specific, Measurable, Attainable, Realistic, Timely), here are five financial goals that you might want to consider implementing this 2013:
1. Work on a budget.
Anybody can benefit from a carefully planned budget, not just those experiencing debt trouble or having difficulties making ends meet. Some people, although already aware of the importance of having a budget to reach their financial goals, dismiss the idea simply because they’re intimated by the thought or they’re not exactly sure where or how to start.
In reality, it’s all about managing cash flow, knowing your household income and the expenses you incur on a monthly basis, the ultimate goal being to have extra cash for savings to fund your future goals or pay down debt as fast as you can.
Recommended reading: Budget 101: Track Your Expenses
2. Become debt-free.
Credit card debt may be the worst form of debt, given the kind of purchases credit cards are often used for and the hefty interest rates slapped on late and/or missed payments. If you’ve been struggling to get out of debt for the longest time already, now is the time to double your resolve and come up with a debt repayment plan that really works.
One of such methods is the snowball method. In this method, you pay off the credit card with the smallest interest first while making minimum payments on the other cards. Basically, you focus your attention on one credit card at a time. When the first card is fully paid off, you’ll have more money left to pay off the second and so on until you’re completely free of credit card bondage.
If you think I got the math all wrong, that it’s mathematically correct to pay off the cards with the highest interest first, check out Dave Ramsey’s explanation of the psychology behind the snowball method.
3. Start a savings plan.
For people who have not been born with a silver spoon, and that’s most of us, there’s a formula that has been proven to work for a lot of the financially successful individuals that we know of today: SAVE, INVEST and REPEAT.
As you are probably aware, frugality and knowing how to delay gratification are qualities needed to financially succeed. These two qualities, as well, are essential to be able to effectively save.
I know you know most or all of these already, but just as a reminder, here are some ways for you to be able to save:
- Instead of eating out, pack your own lunch.
- If you need to eat out, ask for water instead of sweetened beverages. These beverages are mostly the ones that inflate your bill.
- Walk to and from work if you don’t live that far.
- Starbucks may well suit your taste, but if it’s just the caffeine kick you’re after, instant coffee does the job beautifully, too.
- Forego the cable subscription if you don’t watch a lot of TV.
- Watch movies on DVD instead of catching them at your favorite cinemas.
- Turn off the lights and unplug appliances if you’re not using them.
- Instead of a gym membership, there are other ways for you to be able to exercise: jog around the neighborhood every morning, dance your way to health, walk your dog regularly, etc.
- Instead of buying books all the time, download free e-books or swap books with relatives and friends.
Also, it helps to automate your savings. Open an account with a bank that offers this service. This way, even before you receive your paycheck, you already have some money saved up.
4. Educate yourself financially.
They say everything good first happens in the mind. I couldn’t agree more. To be financially astute, it starts with reading personal finance books, listening to audio books and learning from the successes and failures of others who have embarked on a journey to financial freedom themselves.
There’s a lot of information floating free on the Internet. All you need is time to check them out, fully understand what they are all about and practice the actionable pointers shared, if they apply to your situation.
5. Consider investing.
Investing is an integral part of the financial journey. And to be able to successfully invest, you should know what you’re in for. There are mutual funds, stocks, bonds and other paper assets you can look into. You may also set up your own business or consider real estate. One important thing to keep in mind when investing: your investments should always coincide with your core values.
What about you? What are your financial goals for 2013?
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