If you think your money situation could use a little tweaking, take a look at these financial resolutions for the coming year and see how the shoe fits.
1. Set financial goals
What would you like your financial situation to look like one year from now? What about in 10 year’s time? You can’t reach financial goals which you haven’t made, so making a clear and realistic financial plan outlining your goals is a must. If you aren’t already following a financial plan, sitting down and formulating one should be at the top of your to-do list post New Year’s Eve.
2. Make a budget
Budgeting is the easiest and most efficient way to avoid overspending and if you don’t have a budget, the right time to make one is now. Make sure to include all of your expenses and don’t allot less money to monthly expenses than you realistically spend.
Consider making important payments (rent, health insurance, etc.) immediately after your income comes in each month to avoid the temptation to use that money for other expenses. Automating recurring payments by setting up direct debits can make this easier.
3. Pay off debts
This is probably the most difficult resolution to keep, but it is also the most important. Carrying debt is an expensive habit, so if you want to have more money, your debts are the first thing that need to go. Make a clear budget for debt repayments and set up a direct debit to transfer that money from your account as soon as you receive your income every month.
Make sure to compare loan refinancing offers to avoid paying more than necessary by sticking with an expensive loan. You can compare loan refinancing offers here.
4. Review your spending habits
Take a moment to look back over your spending. How much did you spend? Where did it all go? Chances are, a lot of money which could be going into savings or investments is being leeched out of your wallet by impulse spending.
Go over each expense and ask yourself whether it is really important to your quality of life, or whether you could do just as well without it. If you find that using cashless payment methods (Apple Pay, credit cards, debit cards) results in your making impulse purchases, consider leaving them out of your wallet and carrying only the exact amount of cash necessary to pay for budgeted expenses.
5. Start saving money
It is impossible to invest money that you do not have, so saving money is key to becoming financially strong. No matter what amount you can afford to save after covering expenses, make sure to put those savings aside every month.
A savings account which requires you to give notice before withdrawing deposits can be a useful savings tool (you can compare savings accounts here). Making savings difficult to access will help you resist the temptation to use them towards impulse spending.
6. Open a 3a retirement account
If you still haven’t opened at least one 3a retirement account, make it a New Year’s resolution to do so as soon as possible. The sooner you begin tucking away money in 3a accounts, the more you will save on taxes because 3a contributions are tax deductible (up to annual limits). You can compare Swiss 3a retirement accounts here.
7. Cut out overlapping insurance
Do you really need all the insurance coverage you pay for? If you have supplementary health insurance, household insurance, travel insurance auto club membership and credit cards, chances are that you have overlapping insurance. Make a point of going over your insurance policies and canceling overlapping insurance coverage at the next opportunity.
8. Learn the language of finance
When it comes to finance, ignorance is not bliss. Understanding how things like compounding interest, insurance premiums, mortgages and leases work can help you avoid getting bad deals. Learning investment basics can help you grow your money without taking on unnecessary risks and expenses. Good, unbiased educational material is available for free on moneyland.ch and a number of other reliable, independent online sources. Try making a commitment to learn at least one new financial principle every week.