6 Personal finance resolutions for a better 2017

By Doug Matus, personal finance writer

Simple routine spells the death of most New Year’s resolutions. The holidays pass in a blur of excitement and enthusiasm, and before we know it, we return to the daily habits and practices that generated a desire for change in the first place. If you finally decide to make 2017 the year you take control of your finances, it's time to lay the groundwork for achievement.

A popular area to target, the sheer scope of personal finance can overwhelm those with good intentions. However, even if you struggle to keep your resolutions, research shows steady commitment can yield powerful results. To make this year one for the financial record books, take these six New Year’s resolutions as your starting point.

1. Lower debt

Debt provides one of the most pernicious stumbling blocks for personal finance. Regardless of how much we plan and save, debt payments can cripple finances and make it difficult to get ahead. Before you can truly reinvent your financial situation, you must come to terms with your debt load.

It’s often impractical to tell yourself you will pay off all your debt. Instead, create a plan to lessen the burden and pay it off steadily over time. Look at your interest rates, and determine which debt costs you the most money on a monthly basis.

“Debt management can be paying down the most expensive debt first, like credit cards, then personal loans, then student loans, and finally housing debt,” says Jamie Hopkins, professor of retirement planning at The American College. “Debt management is just as much about avoiding debt and looking for ways to cut spending.”

2. Increase savings

Once you’ve created a plan for your current debt, the next step is to ramp up your personal savings. The automatic debit of a portion of your income directly to savings can make this painless. Best of all, even small amounts — $20 to $50 a month, for example — create incremental gains that can evolve into huge dividends.

As with your debt, create a savings plan to maximize your efforts. Look carefully at your finances, and choose an amount that’s both ambitious and comfortable.

“Be specific in your savings goals for next year,” says Rob Werner, president and CEO of Ardent Credit Union. “Use the acronym SMART to set realistic savings goals. Is your goal specific? Is it measurable? Attainable? Relevant? And what of your timeline? This will help make sure you reach all of your savings goals throughout the New Year.”

If you’ve not done so, create an account that you dedicate purely to savings. Most banks will offer free checking and savings accounts, and the more care you take to separate your savings, the more likely that it will grow.

3. Create (and stick to) a budget

A budget provides an invaluable tool to help with any financial resolution. The more control you exercise over your finances, the more freedom you have to pursue financial goals. To get started, track each and every expense over the course of a month. Keep your receipts, take notes on your phone, and check your balance histories to ensure that nothing gets forgotten. Also account for necessities such as rent, utility bills, and debt payments.

Once you have gathered this information, determine the amount you need each month for your necessary expenses. Your remaining resources can go toward savings, entertainment, and whatever you choose; the trick is to remain within your budget, and not allow incidental purchases to overtake your careful planning.

4. Lower expenditures

One way to create more money within your budget is to lower your monthly expenditures. One area often overlooked is various monthly subscriptions. If you have multiple streaming services or memberships, for example, pick the two you use the most and cancel the rest. Also, review your monthly bank statements to locate any payments that may have slipped your mind.

Armed with your new budget, you can also isolate areas in which you overspend. Food and entertainment become the common culprits here, and many people fail to realize how much they truly spend on dinners, coffee, and movies. If you notice that you spend $100 a week eating out, spend half that amount on extra groceries. If you do, you’ll find yourself healthier, wealthier, and wiser to the habits that present an unnecessary drain on finances.

5. Learn to invest

Passive income — the kind generated through investments — is the easiest way to improve your finances and add breathing room to your budget. If you’ve never invested before, you may not know where to start. A financial advisor becomes an invaluable resource, as you can start your investments and ask questions to learn the ropes yourself. However, where you should put your money depends on personal preference and available opportunities.

“There are several avenues now that offer a good return on investment,” says Sam Boothroyd, CGMA and founder of Rymer Associates Online Accountants. “Peer to peer lending is popular at the moment, and averages a 10 percent return. Like all investments, there is a risk involved; but the trick is to loan small amounts to lots of people, and thus defray the risks.”

Once you get comfortable with the risks and rewards of investments, you’ll feel more enabled to take control of your money for the future. As a tool to bring about greater happiness and freedom, you can’t go wrong with more investments in the New Year.

6. Automate everything

Online automation provides a simple way to improve the financial outlook of practically anyone. If you’ve ever had difficulty sticking to a budget, then a resolution to automate everything will create an ideal tool. Most monthly bills, from rent and utilities, to cell phone plans and credit cards, will allow you to set up an automatic payment schedule. Online tools can also help track finances and target areas where you overspend. Through careful planning and automation, you’ll find more money in your budget to play with, which helps support any other financial resolutions you’ve considered.

If you commit to these simple New Year’s resolutions early, you’ll find yourself with a better financial outlook throughout the year. All it takes is a little time to inculcate good habits — and by the time 2018 rolls around, these resolutions will seem par for the course.

Written on December 29, 2016

Self Lender is a venture-backed startup that helps people build credit and savings. Comments? Questions? Send us a note at hello@selflender.com.

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