Five New Year’s Resolutions That Could Transform Your Finances

2024 is almost here, and the new season calls for some changes. Besides all the ‘never-ending’ resolutions we have been taking year after year, managing our financial health deserves the utmost importance. It is something that we are never able to manage as per our desires. 

But don’t worry if you feel like you’ve struggled financially in 2023. The New Year brings a chance for a fresh start. This article is all about how you can best use the opportunity.

In this article, I am going to share five New Year’s resolutions with you that could transform your finances. 

Create A Budget

Have a strong start to the year by setting yourself a new budget. The process will give you a clearer understanding of your finances, helping you take control of your money. Assess your typical monthly income and your average expenses to find out how much disposable income you have. 

Then, allocate this spare money across your different financial goals for 2024, according to how important they are to you. Creating a budget goes a long way because you already have a plan in place before deciding on the source of money. 

Build A Safety Net

It’s always a smart idea to keep a store of money aside in case of emergencies. But this is especially true during periods of economic uncertainty. Having a rainy-day fund could help keep you afloat should you meet with unexpected life circumstances, such as changes to your employment or sudden medical expenses.

 Six months’ worth of living expenses should be more than enough to tide you over should anything happen. You can save this money in various ways- create a fixed deposit in your bank account, invest in real estate or gold, or become a frequent stock market investor. 

Pay Down Your Debts

Outstanding debts eat into your income, making it more difficult for you to improve your financial situation. It’s crucial you get rid of this burden if you want to transform your finances in 2024. Clearing your debt doesn’t have to be complicated. 

Choose a simple debt-clearing tactic like the snowball method or avalanche method. Whichever you choose, make sure you meet the monthly payments on all your loans so they don’t compound further. It is also good for your CIBIL score because the faster you repay your loans, the better your chances will be to get another. 

Avoid Inflation

Did you know that most of the time, the money you have saved actually loses its value? This is because of inflation, which erodes your money’s buying power over time unless it’s earning interest at a rate that at least matches inflation. 

That’s why it’s important you invest your money. But you don’t need to earn huge returns. For most people, using a low-risk, long-term strategy such as utilising indices like the FTSE 100 is more than enough. If you want to reduce the risks of inflation, keep circulating your money and receive greater returns. 

Build Your Credit Score

Remember how I talked about maintaining a good credit score before? Well, that’s exactly what I will be talking about next! The better your credit score, the better rates you can get on future loans. This is especially important if you plan on taking out a mortgage or moving home in the future. 

The mortgage rates lenders offer you effectively determine the overall cost of the loan over the long term. So, it’s worth putting in the effort to build your credit score today to save money tomorrow. Because you never know when things go out of track, and you need an urgent loan. 

What Is The Significance Of Creating A Financial Resolution?

It is always a good thing to start planning early. And money is a good place to begin all your planning with. But all that has been said, one might wonder why a financial resolution is needed. So, here I am to tell you how an individual should always be a step ahead in this particular journey: 

It Combats Economic Troubles

Being one step ahead helps you to combat economic troubles, most of which are coming from relentless spending. Those who plan their finances beforehand are likely to be more satisfied with their money. On the other hand, people who don’t plan end up losing whatever they have. 

Helps In Calculating Expenses

Most millennials report overspending when they shouldn’t. Planning expenses beforehand can help in tracking all your money and limit overspending. After reviewing your expenses, it gets easier to avoid, change, or restrict expenses that turn out to be bigger debts in the future. 

Maximizes Your Saving

It is not only about saving the money but also circulating it. Keeping your money saved in a particular place will simply make your savings dormant. So, it is better to invest it in multiple places and get good returns out of it. I have already mentioned a few good places where you can invest your savings and boost them up. 

Ends Up Fulfiling Your Dreams

It must come as no surprise that you have a dream in life. It could be owning a big house with a lavish pool, a luxury car, investing in your own startup, and many more just like that. A proper financial resolution will help you save and maximize your savings which will lead you to one step closer to your dreams. 

The Bottom Line

Don’t let 2024 be another year of feeling stuck financially. Make a strong resolution to transform your finances with one of the ideas I shared above. Being financially strong ultimately gives you the power to control many aspects of your life. There is no dependency on others, and a sense of relaxation prevails. 

While embracing these practices, you embark on a financially sound journey. In the coming years, you will face anything but not economic difficulties. So, that’s all about it! Here, I conclude the article but don’t forget to collect the takeaways.

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