With the start of the New Year, many people make resolutions with an eye toward the future. Approximately 37% of Americans make financial resolutions. Of this group, 55% want to save more, 25% want to pay down or pay off debt, 18% want to spend less, and the remaining 2% is undetermined.

Automatic Saving

If saving more in 2018 is your resolution, you might seriously consider establishing an automatic savings plan. Set up your paycheck to routinely allocate a certain amount of funds into a retirement, bank or credit union account. Regularly scheduled deposits often help people succeed in their savings goals because they don’t have to think about it. For many individuals, once money “touches” their hands, it is spent instead of saved, even though their intention to save was genuine.

Increase Retirement Savings Percent

Those currently enrolled in a retirement savings account should consider increasing their contribution percentage. Just a one percent increase can have a major impact on overall savings. Furthermore, the regulations that make retirement account withdrawals difficult increase the likelihood that the funds will be left alone to mature.

Paying Down Debt

Carrying credit card debt is a particularly big issue that hampers financial growth and stability. Below are several methods to decrease or eliminate credit card debt:

• Pay off the lowest balance first: Concentrate on making larger payments to the card which has the lowest balance. Once that card is paid off, take the amount allocated to pay off that card and add it to the normal payment of the next card with the lowest balance. Continue to repeat this cycle until you have reached your payoff goal.
• Pay the highest interest rate first: This method is similar to the one above; however, by paying off the card with the highest rate first, you incur less credit card interest. For example, paying only the minimum amount due ($234) on a card with a 16% annual percentage rate and a $10,000 balance will take 5 years, 4 months and cost nearly $5,000 in interest. If you increase that payment to $300 per month, it will take 3 years, 9 months to pay off and cost $3,300 in interest – a $2,700 savings!
• Weigh your options: Most credit card companies offer balance transfers at 0% interest for 12 to 18 months, but with a 3 to 4% balance transfer fee. Look carefully at the balance you owe, as well as the amount of time you think it will take you to pay off the balance. Consider whether the balance transfer fee is actually less than the total interest you would have incurred for the 0% interest period offered; also consider the interest you will incur if you do not pay off the entire balance by the end of the 0% promotion. If the transfer fee is lower than the interest you would have incurred, move forward. If the interest rate will be higher if you carry a balance, then concentrate on paying down as much of the balance as possible before the end of the promotion.

Build Your Budget

A desire to spend less requires a realistic budget and the ability to follow it. If you haven’t already established a budget, this can be a difficult process, as it requires one to account for all expenditures to make it work. Start by categorizing your expenses. Next, determine how much you are able to spend in each category within a pay period.

Once you have spent funds in a certain category, you are not allowed to spend again until the next pay period. The payoff? A budget that allows you to keep a close eye on each dollar spent, and identify unnecessary spending…which leaves more dollars for your financial resolutions!