With 2018 officially here, there’s no better time to start getting your financial house in order.  While most popular new year’s resolutions will center around health, weight, and fitness, improving your finances is an area that can easily get overlooked.  Therefore, it’s in your best interest to start off 2018 by identifying S.M.A.R.T. financial goals, meaning those that are: Specific, Measurable, Attainable, Realistic, and Time-sensitive.  Like any goal, the key to successfully completing each suggested financial move is a disciplined approach that’s tailored to your own individual strengths and weaknesses.

Updating your BUDGET & SAVINGS plan

Arguably the most important element of any house is a solid foundation. And when it comes to building your financial house a solid foundation equals having an up-to-date budget that reflects your current reality.  A budget should not only include a plan for how much you’re going to spend each month, but also how much you plan to save.  So, in updating your personal budget for the new year here are some key questions to begin with:

  • Are you currently saving money each month?
  • Have you included both your total fixed expenses and total discretionary expenses?
  • Have you saved up money enough to cover as least 3-6 months of normal expenses?

If your answer to any of the questions above happens to be “No”, then the most urgent priority for 2018 should be an emergency savings fund.

Creating a DEBT ELIMINATION strategy

Along with a budget and savings plan, creating a plan for eliminating debt is equally as important.  If you find that your 2018 budget includes more expenses than income, it’s only a matter of time until you begin to see debts pile up and your credit start to suffer.  Because credit is so closely linked to how we interact with debt, these two areas almost always go hand in hand.  So, in order to begin improving your credit you must first have a good understanding of your individual debts and how they may be working against you.  Some key questions to begin asking as a starting point include the following:

  • Have you much has your total debt increased in the last 6-12 months?
  • How long will it take you to pay off your existing credit cards and unsecured loans?
  • How much interest & cash flow can you eliminate by paying off installment debt early?

Answering these questions accurately and confidently will give you the basic tools necessary to create a good debt strategy.  Along with being S.M.A.R.T. in your debt elimination plans, it’s also important to remain consistent so you don’t end up going back down the same road in 2018 as in 2017.

Improving your CREDIT SCORE and history

After your budget is updated and you’ve created a solid debt strategy, you should now have enough ammo to start improving your overall credit score.  Despite all the misinformation and myths surrounding credit, there are some universal truths that generally remain unchanged.  For example, by law each person is entitled to a free copy of their credit history report at least once per year.  This holds true for each of the three major credit bureaus which include Equifax, Experian, and TransUnion. It’s important to note that your numeric credit score is generally not included with this free report (which can be accessed via www.annualcreditreport.com).  However, there are still many online resources available to help you access your credit score without paying unnecessary fees.  Among the key questions to address when working on your credit score are the following:

  • Are you paying all of your bills on time each month?
  • Do you pay off your total credit card & revolving debt balances (in full)?
  • Has your credit been pulled excessively over the last year in order to acquire new debt?

These three areas without question make up the majority of your overall credit score. So, any legitimate strategy for credit improvement will involve evaluating these areas a regular basis.