Most of us set New Year’s resolutions along the lines of losing weight or quitting smoking, which are admirable but usually abandoned by Valentine’s Day.
So forget those now. Instead, here are five attainable financial goals that could show you results by the end of 2017.
Set Clear Financial Goals
Dreams like “This will be the year I win the lottery” are nice, but setting realistic money goals with firm deadlines is a far more practical way to achieve your financial objectives.
For example, saving money for your child’s college education is a concrete ambition with a built-in target date. To work toward that goal, consider cutting your expenses or looking for ways to earn additional income. An alternative strategy could be to force yourself to save more of your paycheck through automatic bank account transfers to a 529 plan or another savings vehicle.
Once you know how much money you need and how long you have to save it, it’s easier to turn an idea into a reality.
Slash Your Debt
Consumers in the average U.S. household with a mortgage owe $155,361 on their home, and student-loan holders, on average, have $31,946 left to pay for their education. U.S. households with credit card debt owe an average of $16,140. Though it’s imperative to pay your bills each month, the debts with the highest interest rates — usually credit cards — should be a priority.
Some ideas: Throw some money toward your credit card debt every pay period instead of waiting until the next monthly bill. If you’ve got a significant other, try living on one of your salaries while using the other strictly for debt reduction. Or consider holding a yard sale and earmarking the proceeds for your credit card debt.
Optimize the Debt You Have
There’s no reason to use a credit card that doesn’t offer you something, whether it’s cash back or frequent flier miles. Jan. 1 is the perfect day to take a hard look at your cards and figure out whether they’re working hard enough for you.
Vowing to dust off that gym membership is admirable, since physically fit people typically have fewer medical expenses and are able to keep working longer. But your muffin top isn’t the only thing you should reduce.
- Review your cable bill. Do you need all those premium channels?
- What about that gas guzzler in the driveway? In the long run it may be cheaper to trade it in for something more fuel-efficient.
- Most of us don’t use all the cell phone minutes we’re allotted and could make do with a cheaper plan.
- Paying too many banking fees? Look for a financial institution, such as A+ Federal Credit Union, that offers free checking and free ATM transactions.
Strengthen Your Retirement Funds
If you start at 25 and sock away 15% of your earnings every year, Boston College’s Center for Retirement Research says, you’ll be able to retire comfortably (replacing 70% of your annual income) at 62. But if you start saving for retirement, you’d have to save a whopping 44% of your annual income to retire by 62.
When setting financial goals, make sure they’re targets you can achieve — with the right amount of discipline, of course. Setting realistic money goals and hitting them will make it even easier to stick to your New Year’s resolutions in 2017.
Judy McGuire, NerdWallet
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