When coming up with resolutions for the new year, health and fitness goals are always at the top of the list. Will you hit the gym again this year? Start a new diet? Take up yoga?
Physical health is an important and worthy goal to pursue — but financial health can be just as important, and it’s talked about much less.
What Does It Mean To Be Financially Healthy?
Being financially healthy means having control over one’s resources, consuming and spending responsibly, and saving for financial stability and independence. Sounds pretty good, doesn’t it? Here are five steps you can take to become financially fit in 2018:
Kick Bad Debt To The Curb
We’d all like to go through life completely debt-free. If that isn’t possible, know that some debt is much worse than others and attack that first.
Bad debt is debt with an interest rate of more than 6.5 percent, typically coming from credit cards, personal loans, car loans, and so on. Bad debt accumulates when you spend more than you earn.
Home loans and student loans with interest rates below 6 percent are not considered bad debt, and you should continue making minimum payments while aggressively paying down higher-interest debt. Once all of your bad debt is gone, you can begin aggressively paying down your “good” debt for even more financial stability.
Make A Budget
One of the most important things you can do for your finances in 2018 is set a budget you can actually stick to. This means you’ll need to take an honest look at your accounts and calculate your monthly expenses.
Make a list of all your bills, including your rent/mortgage, groceries, and credit card payments. Compare this with your total monthly income to see how much money you can put toward paying off debt (and eventually building a savings).
Use a money manager to visualize your spending habits, establish savings goals, and track your progress.
Cut Costs Where You Can
After you’ve made a budget, examine where you can cut expenses so you can divert more money each month toward your debt payment or savings goals. The average person spends $8,000 per year on their car; can you sell yours, put the money toward debt, and then save money each month using public transportation? Can you make a meal plan and cook your meals at home? Can you cancel some magazine or streaming subscriptions?
The more money you can save, the quicker you can be on your way to financial stability.
Start Saving (And Make It Automatic)
Once you’ve paid off your debt, it’s time to start saving! Consider making short-term and long-term goals, then dedicating a certain percentage of each paycheck to those goals. Once you’ve calculated the numbers, set up automatic transfers to your savings account so you don’t even need to think about it — you’ll just be saving money while continuing to live your life.
Use A Mobile Banking App
When it comes to keeping track of your finances, knowledge is power. Using a mobile banking app will help you keep a close eye on where your money is going in real time, rather than waiting for statements to assess the damage after-the-fact. Pay pills, make loan payments, and transfer your money to savings all from the same convenient location.