But if you’ve been battered by economic forces beyond your control (as many have recently), it may be tough to craft financial resolutions ambitious enough to have a real impact on your situation – especially if you fear that unforeseen obstacles may later force you to scale them back or even lose ground.
That’s why I urge taking baby steps – setting small, meaningful objectives that provide a sense of accomplishment and that you can ramp up when your situation improves. Here are a few examples:
Scale back expenses. If you can’t make a big dent in your monthly costs, like refinancing your mortgage or selling an unneeded vehicle to eliminate a car payment, look for lots of little dents that can add up:
- Save $10 a week by having one less fast food meal and to-go coffee; or rent a DVD instead of going out to the movies – that might save about $500 a year.
- Lower the thermostat in the winter by 1 degree and save 3 to 5 percent on your utility bill – saving $5 a month equals $60 a year.
- Drive slower. Each 5 mph you drive over 60 mph costs about $0.24 per gallon of gas. Properly inflate your tires, keep the engine tuned and cut out aggressive driving habits and you’ll save even bigger bucks.
- Shop around for better home and car insurance rates, and consider raising low deductibles. (Just make sure your coverage has kept pace with inflation.)
- Balance your checkbook. Even though many banks have recently lowered fees for bounced checks and overdrafts, one a month at $25 a pop adds up to $300 a year.
Build an emergency fund. Financial experts usually recommend stowing three to six months’ expenses in an emergency fund. That’s a good long-term goal, but if it’s not currently realistic, don’t simply give up without trying – stash some of the cash you’re saving above, a few dollars each month. You won’t miss it and might just be saved from having to take out an expensive short-term loan to cover emergency car repairs or an overdue electric bill.
Get organized. Even if you can’t afford to pay off all bills in full each month, at least know where you stand regarding due dates, minimum payments due and credit limits so you don’t inadvertently rack up higher interest rates or damage your credit score. If you’re a chronic procrastinator, set up automatic bill payment with your bank – it’ll save on postage as well.
Stick to your budget. If you don’t have a budget, make this the year you create one. Numerous online tools are available to help. For example, Practical Money Skills for Life, Visa Inc.’s free personal financial management program (www.practicalmoneyskills.com/budgeting), features budgeting worksheets and calculators, guidelines for living within your means, budgeting recommendations for back-to-school, holiday spending, travel, and much more.
Jason Alderman directs Visas financial education programs. Sign up for his free monthly e-Newsletter at www.practicalmoneyskills.com/newsletter.