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The Top Financial New Year’s Resolutions

If you are old enough to pay bills and buy presents, you know doubt have some financial resolutions of your own this time of year. Personal finance is a game of trial and error. You never know enough to save yourself the occasional mistake, but nothing is a better teacher than these same mistakes. This year, take what you’ve learned and combine it with a renewed discipline and purpose. If you make the best of your financial situation for one year, you’ll have changed your life by 2016. In this effort, I’ve laid out a few new years resolutions that I know will make your financial life a lot brighter.


  • Start a Retirement Account/Max Out Your Retirement Account. Ideally you have already started an IRA and you also have a 401K. I am not so lucky to have both, but I make sure to max out my IRA every year. Since not everyone know what these things are, I will explain. An IRA is a tax-protected account, where funds sit and grow until you use them in retirement. This is a simple explanation, and the reality is more complex, but it’ll work for our purposes. 401Ks are similar, but involve employer matched savings. Left to grow, this money will grow according to the laws of compound finance, each year’s gains going back into the pile to grow more and more, the more money you have. Maxing out your annual contributions is the best way for the average person to one day grow wealthy.


  • Kill Off Your Debt. Debt is the price you pay for borrowed money. Instantaneous gratification is fantastic. You get the things you want when you want them. But then you’re left paying them off for months and years, at high interest rates. Those interest rates combine to add hundreds and thousands of dollars to your initial purchase price. If you have credit card debt, or other forms of high-interest debt, do everything in your power to wipe it out. If you can kill your debt, you’ll save yourself many thousands of dollars and improve your credit score, which will help you take on less debt in the future. Pay all your minimums and focus all your additional resources on your lowest debt. When it’s paid off, move on to the next smallest, with the extra money you have to spare from that first debt’s minimum payment. Repeat until all debt is gone.


  • Budget and Save. Accounting and business software makes this a lot easier. Rather than having to mentally keep track of all your money all the time, apps automate your savings and budgeting. Communicate your specific goals to your financial software, and it’ll give you actionable steps to achieve them. Savings can even be automated, if you have a hard time keeping up with it on your own. If you learn to save and budget well, you’ll change your life for good and end up with a much better lifestyle in time.


There are, of course, many other ways you can resolve to make your financial future a bit more bright. But if everyone simply focused on these three simple steps, our lives would be a lot better. Do a little research and learn about each one of these factors individually. Once you fully understand them, put them into practice and watch your financial life start to change.

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