It’s almost midnight on December 31. Are you ready?
One timeless tradition for many of us on December 31 is to reflect on the prior year’s events and make resolutions or set intentions for the coming year. After 2020 handed us the “adventure” that it was, and with 2021 looking like an enthusiastic second runner-up, it makes sense if folks feel nervous in the what’s coming department, or as some say “next?!”
While you can’t predict if you’ll get that raise or bonus, switch jobs, or hit the gym three times a week consistently, there is something you can reflect on and carve out a few goals for—your finances.
Should you partake of this exercise, according to a survey by WalletHub, you’re in a fantastic company. Over 92 million Americans said they are likely to make 2022 resolutions that relate directly to their finances. Notably, nearly a third want to save more money, making it the top resolution across the board. However, the findings from WalletHub also reveal that despite the best of intentions, only 42% expect to make it a full year, and seven in 10 people admitted that in the past, they’ve cheated on a resolution.
Without a proper plan of attack, it’s easy to see how any resolution has the potential to become a nice notion you once had. But with your finances, it’s paramount to stay ready so you don’t have to get ready. Here are a few tidbits:
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Make & Keep A Realistic Budget
Budget is not a dirty word, but if you’re doing this for the first time or after being on a spending bender, reeling in it might be a painful beginning. What’s more painful, however, is the amount of credit card debt the National Federation for Credit Counseling says we notched it up in 2021 and our debt is currently at more than $950 billion. The good news: WalletHub says making a realistic budget you can stick to is simple. All you need is to gather your bills from the past few months and to make a list of all of your recurring expenses. “Then rank them in order of importance, with true necessities such as housing, food, and healthcare obviously taking the top spots.” Other steps include chatting from the bottom of the list until the amount you take home “exceeds what you plan to spend,” and tracking monthly spending all year “to make sure you’re abiding by your budget,” according to WalletHub.
Repay 20% Of That Credit Card Debt
With the average household staring down about $8,000 in credit card debt, the idea of facing that beast after everything else you’ve been through over the past few months could be understandably daunting. The best plan of attack: start small and remember that a 0% balance transfer could be your best weapon in the fight. Per WalletHub, a credit card holder in $8,000 of debt can commit to paying off 20% over the course of the year would spend about $1,600, or $133 per month with a card offering a 0% balance transfer for 12 months or more. “If you can afford higher payments, by all means make them,” writes WalletHub. “The sooner you can reach debt freedom, the better off your wallet will be.”
Speaking Of Credit Cards
Did you know credit cards serve different needs and purposes that could benefit you in the long run? In addition to a 0% balance transfer type benefit, using different cards for different purposes (known as the Island Approach because consumers use their cards as if they are a chain of islands) can create some pretty sweet rewards and kickbacks in the long run, according to WalletHub. “Doing so enables you to get the best possible terms on each card, rather than setting for average terms on a single card.”
Physical Health Is Still Wealth
This last one is a bit of a doozy for most of us. How many times have we said we’d do something to improve our overall health, like sign up for a gym membership, or buy new sneakers to take up running, only to look up a few months later and realize we should cancel that membership we aren’t using or note that the sneakers haven’t gotten as much road time as we had initially hoped? WalletHub notes that the average person spends roughly $5,177 per year on health care-related expenses. Meanwhile, our biggest sources of stress are money and the economy, according to the American Psychological Association. “This underscores the importance of getting your financial house in order as well as exercising regularly and engaging in other healthy practices aimed at reducing health care costs,” writes WalletHub. “It won’t be easy, but this is one resolution that will certainly pay dividends in multiple areas of your life.”
As you count down to midnight and anticipate or dread what’s coming, wouldn’t it be nice to have one less gigantic worry like your money looming over your head? I’ll drink to that!
For the full list and report from WalletHub, click here.