At the start of a new year, people will often try to make resolutions to focus on their physical health. But we believe that along with your physical health, you need to be focusing on your financial health as well. In this article we look at ways in which you can promote better financial health, in other words we are giving you some key financial resolutions to make this year.
1.Most people tend to save money here and there; then they blow it up on things. There is not enough funds stashed away for an emergency. Emergency fund is basically the amount of money you would require to survive for three to six months without a job. It is alright if you don’t have much stored away or if you’ve never considered doing it in the first place. The start of a new year is a great time to start building your emergency fund. Start out small by trying to build the emergency fund to about $2000; once stashing away cash for the emergency fund becomes a habit then slowly start to increase the total to living expenses you would require for six months. The key here is to save every month, so if you believe that saving $100 a month is manageable for you then stick with it. The mistake that most people make is that they start off and then start slacking off when it comes to building the emergency fund. The emergency fund can be tapped into when you need cash at a moment’s notice but make sure to replace the money as soon as you earn it.
2.There are two types of expenses, essential and non-essential. Essential expenses include bills, tuition fees, and money for gas, food and water. Non-essential expenses are your luxury expenses such as splurges on fashion, holidays, theatre passes and fast-food. Every month keep a track of how much essential expenses and non-essential expenses is being made. Ensure that non-essential expenses don’t outweigh essential expenses. You can either use the old school method of enforcing a budget using a notebook to write down expenses or turn to user-friendly apps that do the job for you. We recommend the financial budgeting app, Mint. As long as you stay on top of your expenses, you should start seeing a huge difference in your financial health.
3.The minute you start handing over huge wads of cash, you start to feel the amount of money you’re spending on trivial things. The biggest mistake that most people do is to believe that using their debit cards instead of their credit cards actually make a huge difference, but the reality is that there is a difference between taking out $1000 from your pocket and using your debit card to pay $1000. Make it a habit to give physical money for a couple of months to make sure you understand how much you spend on a daily basis. The act of giving cash will make you more conscious about spending and will help you make better calls when it comes to your finances.