The champagne has popped, the fireworks have exploded, and the last chorus of “Auld Lang Syne” has faded into memory. Happy New Year! 2024 is officially here.
At the start of a brand-new year, financial goals may be top-of-mind. It’s likely been a long holiday season with a lot of spending, and you may be ready to make a big change to the way you manage your money.
That’s why we’re sharing some of our favorite money-savvy new year’s resolutions — practical whether you used a payday loan online in 2023 or handled emergencies any other way.
So, what are you waiting for? Find your inspiration below.
1. Pay Your Bills on Time
Paying bills on time isn’t just important; it’s also the mark of a good money manager. If you can make this a habit in the new year, you may start to see some perks.
For one, paying bills on time means you’re actively trying to keep your account in good standing. This can save you late fees and other costly penalties that come with missing due dates.
It may also come with benefits to your credit. Late payments may show as delinquencies on your credit report that influence your score if they’re reported to a credit bureau.
If a bill goes unpaid for so long that your creditor concludes that you likely won’t pay it, they may charge-off the account or sell it to a collection’s agency. This could further impact your score.
How to Start Paying Bills on Time
We all know we should be paying bills on time, but it may not always be the easiest of financial goals to obtain.
Why? Because sometimes, life gives you lemons.
You might run into an unexpected emergency expense that leaches cash away from routine bills, or you may face a serious illness that makes you miss work, cutting your paycheck in half. And then sometimes, you can just simply forget that a bill is due!
Don’t Let Yourself Forget
If it’s something as simple as your memory, download an app that sends out reminders a few days before a bill is due. Setting up automatic payments with your financial institution is another easy way to make sure your payment is sent on time.
Get Your Creditors Involved
If a lack of cash stands in your way, do not avoid the bill. “Out of sight, out of mind” doesn’t work with your finances. Avoidance will only make a bad thing worse — from the late penalties that pile up to the stress you’ll feel.
Communicate with your creditor about your situation and be sure to ask about any possible alternative payment arrangements when needed.
Talk to an Expert
If paying bills on time is simply impossible, no matter what, it’s time to ask for help. Reach out to a debt specialist to see if there are any services that may help you get a better handle on your finances.
2.Follow a Spending Plan
Paying bills on time should be easier when you have a spending plan in place. But this isn’t the only reason why following a spending plan is a fantastic idea for 2024.
A budget can help you manage your money better. It gives you a chance at organizing your monthly income around important bills and other financial priorities, so you may be more likely to make smart money decisions.
To create a budget, you’ll need to track your incoming and outgoing cash. This equips you with two very important pieces of information about your finances.
- Spending Limits: You’ll know how much money you have to spend every given month or week. This defines the limits of your spending plan until you get a higher paying job or start working a side gig.
- Spending Habits: You know how much money you tend to spend, alerting you to positive and negative spending habits.
If your budget shows your habits are at odds with your limit, you need to take a look at your expenses to see which ones you can realistically eliminate.
“Everything” May Not Be the Answer
Squeezing every last ounce of joy from your budget and committing to an extreme spending plan isn’t always necessary to be a budgeting success. We debunk these budgeting myths and more like them in another post on our blog.
Sure, a spending plan helps you identify spending you can’t afford.
But on the flip side, it also helps you plan for spending you want to be able to afford one day — and that may include the fun things in life!
It does this by striking a balance between austere cutbacks and frivolous spending. By making sacrifices in some areas, you may be able to find the wiggle room in your budget to treat yourself to a monthly concert or a weekly takeout meal.
If this is the first time you are creating a spending plan, look here for more budgeting tips to help you spend within your means.
3. Spend Less
After a costly holiday spending season that convinced you to loosen your purse strings, getting back on track may be on your list of things to do — even if your budget shows you aren’t spending more than you earn.
And so enters the goal to “spend less”. While it’s a well-intentioned resolution, it may be too general to be of any specific use.
Spend less on what? And how much less are you talking about?
Without answering these questions, you won’t have a clear objective. And without that, it can be hard to understand what you need to do.
Contrary to a general goal, say you want to shave off $50 from your monthly food expenses. With $50 in your sights, you have a definitive goal that you can work towards.
You might be able to achieve it simply by ignoring the lure of unnecessary takeout. But not everyone indulges in ready-to-eat food this often. Some never splurge on these meals at all.
If you’re dedicated to making your own meals, you may still find savings in your food budget. Following a meal plan, using a list, and shopping with coupons may help you knock your target of $50 off your bill — or more!
Of course, groceries may only be the beginning of your money-saving journey. If you’re ready to take the next step, consider every one of your variable expenses – the purchases you make that have variable costs month-to-month – and financial wants. Look at what you spend on entertainment, travel, and tech.
Unlike a fixed necessity like rent, which stays the same amount each month, these non-essential expenses may fluctuate depending on what you buy.
By no coincidence, they’re also the budgeting categories you have the most control over. This means you may have a greater chance of regulating how much you spend on these expenses.
4. Monitor Your Credit
When was the last time you checked your credit score?
Many of us check in with this financial number when we need to borrow money. It’s normal to check before you consider renting or applying for a mortgage or an installment loan. Both landlords and lenders may ask to see your credit before they rent out a property or grant you a loan, so it’s a good idea to know what they might see!
But did you know each of the three major credit reporting agencies (Equifax, Experian and TransUnion) must provide you a free check, even if you aren’t planning to move or take out an installment loan? This means at the start of 2024, you have three opportunities to check your credit.
Why is checking your credit on this list of financial goals? Here are some reasons why you’ll want to start this habit in the new year.
- It helps you shop for a personal loan. Knowing your score may help you understand what you qualify for. If subprime credit limits your selection of cash loans, consider doing some research on installment loans online or any other type of personal loan to find the right loan product for you. An online installment loan may not have the same restrictions on credit as other alternatives.
- It’s a security measure. Sometimes, your report — and therefore your score — is not accurate. A quick check may catch errors or fraudulent marks that may be tarnishing your good name.
5. Reduce Credit Card Debt
If you’re tired of opening your credit card bill each month, take 2024 as the year to reduce your revolving balance — or to pay them off completely!
Achieving this goal comes with significant perks. Some of these may include:
- Decreasing your interest charges
- Easing your financial anxieties over owing money
- Lowering your credit utilization rate
What is Your Utilization Rate?
A utilization rate shows how much of your available limit you use. Typically, it’s expressed as a percentage.
For example, your neighbor may use 20 percent of their credit card limit, while your co-worker may use 75 percent of theirs.
Where your usage falls on a scale of 1 to 100 can give you some insights into your financial habits. It may be an important factor when it comes to your credit score, provided your credit card company or line of credit lender shares your account information to a credit bureau.
At 75 percent, your co-worker may look riskier than your neighbor with a 20 percent rate. This is because the closer you get to 100 percent, the less responsible you look to lenders.
Generally, a high rate suggests you’re treading financial water. It signals you need to rely on these accounts frequently to get by, and you don’t have the cash to pay off your balance in full.
The closer you get to zero, on the other hand, suggests you have a handle on your finances. You only charge what you can afford to pay back in full, and it’s likely not a lot.
A utilization rate of zero may be a hard goal right off the bat. Instead of focusing on zero, try for the best credit utilization rate you can achieve in the moment. Generally anything below 30 percent may reflect well on your financial habits.
Start by Making More Than the Minimum Payment
It may be tempting to only make your minimum payment, but if you have the necessary room in your budget, you should try to pay off your debt in full. Paying just the minimum is best reserved for instances when that’s all you can afford. If an emergency makes it impossible to cover your entire owing balance and other bills, the minimum payment is a cheaper alternative. It keeps your account in good standing until you can make the full payment.
Unfortunately, it may add additional costs to your plate. The minimum payment is only a fraction of your full bill, so you’ll carry over a balance that may be subject to interest.
With every billing statement you carry over a balance, you could accrue more interest on top of the purchases you charged. So, your particular interest rate significantly impacts what this kind of balance costs in the long-term.
By paying off the full balance whenever you can, you’ll avoid accruing any more interest than absolutely necessary.
6. Create an Emergency Fund
An emergency fund is money you put aside specifically to help you deal with any emergency expenses that may come up down the line. Without one, there’s no cushion to soften the financial impact of an unexpected auto bill or household repair. In many cases, selling off belongings or taking out an installment loan may be the only way to cover these unanticipated costs.
How Much Do You Need for an Emergency?
What you need in savings is one of the biggest questions about money you might have.
When it comes emergency savings, bigger is always better. A well-stocked short-term savings account may take on any emergency — whether it’s an unexpected furnace check-up or a substantial medical bill.
The biggest ones may even protect you when health issues or unemployment means you can’t bring home a paycheck.
But “bigger” is just as vague as our previous goal to “spend less”. Just how much do you need in a savings account to feel comfortable?
The answer is subjective. It relies on your income, financial obligations, and risk tolerance. Nevertheless, one general rule of thumb is three to six months of expenses.
Half a year’s worth of rent, utilities, and groceries is no easy feat! With such a daunting goal, you may find it easier to focus on smaller steps you have to achieve along the way. How can you do that?
Cut Unnecessary Spending
Look at what makes up your financial wants like entertainment, takeout, and shopping to see where you can free up cash. Say goodbye to as many as you feel comfortable eliminating.
Reduce Spending on Necessities
Brainstorm how you may bring big changes to your regular, fixed bills. Research insurance brokers, cell phone carriers, and utility providers to see if switching companies promises to lower your bills. Explore what it would take to move to a cheaper neighborhood and consider carpooling to reduce your commuting bills.
Automate Savings
You don’t have to think when you’ve automated your contributions. This eliminates any errors, like forgetting to deposit or accidentally spending what you meant for savings on unnecessary splurges.
Be Ambitious Yet Sensible
In the new year, you’re probably feeling inspired to make sweeping changes to your finances. Choosing one or several of these financial goals may help you do that.
Just a word of advice: make sure you don’t pick so many resolutions that you can’t give each of them the attention it deserves.
You may also want to consider taking out an online loan if an unexpected emergency blindsides your budget. Something like an installment loan may help you pay your emergency expenses if your savings fall short of what you need. For more information on how to use an installment loan in an emergency, learn more about your options for emergency loans.
Any one of these financial goals may take a lot of effort and time to achieve. Taking on too many may stretch you too thin, and you might not have the energy to stick with all of them. Exhausted and discouraged, you may be tempted to give up on your financial goals altogether.
But it doesn’t have to be that way. By setting a practical limit to the financial goals you set in the new year, you’ll be in a better position to achieve them.
Good luck and all the best for 2024!
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Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see MoneyKey's Terms of Use.
