TIPS TO KEEP YOUR FINANCES ON TRACK IN 2016

As the New Year approaches, it’s time to revisit the previous year, take stock, and plan changes for the coming year. While many people make sweeping New Year’s resolutions that often fall by the wayside, these five resolution options may involve less effort to achieve throughout the coming year and beyond.

1) Check your credit report for errors.

The FDIC explains that credit reports impact your life far more than you may realize. It’s no longer about simply getting a lower interest rate on a loan (or even getting the loan at all). Today, credit reports may be used to determine whether or not you can get insurance – and how much that insurance will cost. Potential landlords may use the reports to screen tenants, and employers may use them to evaluate job applicants. This resolution would involve requesting your credit report, looking for any errors, and knowing your credit score.

2) Build an emergency fund.

We learned in the Great Recession that job security is a fluid thing, not a given. Thus “saving for rainy days” has taken on new meaning. The American Bankers Association highly recommends saving for emergencies, listing it as the top suggestion if you receive an income tax refund. Whether you believe your job is at risk or not, it’s never a bad idea to save funds for life’s little, and sometimes not-so-little, emergencies.

3) Pay down your debt.

Another great resolution to make for the coming year is to pay debt down. One idea is to start with the highest interest debt and work your way down so that only items carrying lower interest rates remain. Having some debt is actually good for your credit. It’s all about balance and creating a history of responsible money management.

4) Establish a budget – and stick to it!

Creating a budget that allocates resources for things like paying bills, reducing debt, paying for your child’s college education, and saving at the same time can feel a little constricting. However, if you work hard to create a budget that allows for some of life’s pleasures while also making positive progress towards your long- and short-term financial goals, all that remains is sticking to it – for a few years.

U.S. News & World Report Money reports that budgeting is important for many reasons, including that it helps you to prioritize your spending, provides you with peace of mind, and allows you to begin building wealth. Perhaps most importantly, though, working with a budget makes you more mindful of your spending.

5) Take control of your financial identity and privacy.

Good financial health is a huge responsibility for individuals and families. In the digital age, it is more important than ever before to be aware of your financial privacy and to work to keep your financial information safe from prying eyes and more.

One way to take control of your financial privacy is to change your passwords … frequently. The Wall Street Journal also recommends the following actions to safeguard your finances and your privacy.

  • Shred identifying and financial documents.
  • Monitor your credit reports.
  • Review banking and credit card statements carefully.

These financial resolutions are all fairly simple steps you might take to build a better financial picture for yourself in the coming year. Any one of them may bring benefits. Embracing all of them, though, packs a pretty powerful financial punch.

source: popsci.com

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