2015 Resolutions for Financial Health

If you’re like most people, you made a New Year’s resolution or two as December rolled into January – and some of those resolutions were probably money-related. The good news is, unlike most people, you can actually stick to those resolutions! It’s cliché, we know, but there really are simple and easy steps to follow that can help you take charge of your finances. Though the steps discussed below might not guarantee outright wealth, they can help you secure your financial health – and in return, the increased freedom, peace of mind, and yes, even spending power that comes with it. Here’s how to do it.

Itemize, Itemize, Itemize…

You would be amazed at how many individuals don’t know how much their monthly liabilities are (wait… don’t tell us this describes you too!). If you truly want to take charge of your finances, the first thing you’re going to have to do is determine how much money you spend each month, and where it goes. What spending is discretionary – meaning you choose to spend it – and what spending is mandatory? Write down your expenses and separate them out, line by line. This will help you determine, definitively, what amount of money you have to “play” with each month.

Use Separate Accounts for Separate Expenses

Once you determine what your discretionary and mandatory spending adds up to, you can start putting into action a plan to make sure these expenses are accounted for. One way to do this is to set up separate accounts for different types of expenses. If, for example, you deposit money into an account that is used exclusively for mandatory spending (and you budget accordingly), you can be sure that you’ll never not be able to cover these costs at the end of the month. Put simply, you can’t overdraft an account if you’re not using it except for pre-set expenditures. Determine your monthly mandatory spending amount, divide this number by the amount of checks you receive in a month, and deposit accordingly.

Set Clear Goals

What are you looking to achieve with your finances this year? Do you have a set savings limit? Would you like a certain amount of spending money monthly? A money plan and a weight loss plan are really no different in this regard: you need to determine what your goals are first, so that you can then start putting into place a course of action to achieve these goals. If you want to put away X amount of dollars per month into a savings account, what expenses must be cut to achieve this? That is the type of thinking you’ll need to do.

Implement a Savings Plan

Speaking of savings… the benefits of having a rainy day fund hardly need be touted. Everyone wishes they had a bit more money in the bank. But a savings plan should entail far more than $100 here and $100 there. You should be putting aside money into one, two, or even three different savings accounts every month. Yes, you should have a dedicated bank account, but you should also consider 401(k) options, IRA accounts, retirement funds, and even stocks and bonds. As the saying goes, a diverse portfolio is a strong portfolio, and though putting a small amount of money into these accounts might not seem like much now, the aggregate of all of these accounts over 30 or 40 years can mean the difference between traveling the world and staying at home playing Bingo.

Consolidate Your Gadgets

You may not realize it, but the modern, so-called “Smart Life” has made most of the gadgets in your home redundant. Think of all of the devices that you have in your house or apartment – televisions, desktop computers, laptops, tablets, smartphones, stereos, video game consoles. Now think about how often you use each of them, and how specialized each of those devices are. There’s a better way! Companies like Samsung are on the forefront of the new Smart Home, allowing you to do away with these devices by consolidating, bundling, and eliminating. Convertible laptops can play the role of PC, laptop, and tablet, and Cloud storage makes internal and external hard drives all but obsolete. Downsize and save money!

Budget, Budget, Budget…

We told you the importance of itemizing, but it’s equally important to budget! Knowing how much you spend every month does you no good if you routinely spend more than that on credit cards. Remember, how much you spend in a week or a month, ultimately, is up to you. Implement a simple budgeting plan, and financial health is right around the corner!