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Did you make New Year’s resolutions as we welcomed 2022? If so, have you given them up yet? Although they are good ideas in theory, most of us toss our New Year’s resolutions out the window by February, and sometimes even sooner. This is often due to people creating resolutions that are a tad too optimistic for reality, which quickly leads to frustration and abandonment. However, if you’re hoping for some achievable New Year’s resolutions, we have a few ideas for you. Here are five financial goals you can maintain this year!
#1 Create an emergency account
We say emergency account, but this could also be an account to set aside savings, a retirement fund, a vacation account, etc. If you don’t already have a separate account for emergencies, though, we recommend setting one up! A rainy day fund is used for situations where big, unexpected expenses come up. This could be emergency home repairs, vet bills, urgent dentist visits, etc. Any of these could take a huge chunk of money out of your pocket, so it’s best to have an account dedicated to handling these costs. An emergency account is also useful if you experience a loss in income and need backup money for your bills and mortgage payments. You can start small, maybe adding 10 per cent of your monthly income to your account. Slowly, you will start building your savings. Try to be realistic about what you can contribute! Don’t attempt to add half of your income to your account, because this will lead to frustration when you can’t accomplish it.
#2 Make a monthly budget
Ah, budgeting. Everyone dreads the thought of creating a budget, but they’re a handy and sometimes essential tool. Your budget takes into account your income, expenses, and savings. The best budgets will consider essential payments like bills, mortgage payments, or rent, along with things like dinners, shopping, and movies. Your budget has to consider your essential costs first, but you should leave room for non-essential spending. If you try to cut out your extra spending entirely, you likely won’t succeed. A common rule is the 50/30/20 rule, which means your monthly income is split three ways. 50 per cent goes toward your needs, 30 per cent goes toward your wants, and 20 per cent is for savings. These exact numbers might not work perfectly for you, but you can adjust them to reflect your situation.
#3 Improve your credit score
Improving your credit score is something that can benefit you at any point in your life. If you’re hoping to buy a home, a good credit score opens up your options for mortgage products and rates. If you’re a home owner, improving your credit score can help you refinance your mortgage for a better interest rate. Plus, a solid credit score also helps you secure the best rates if you ever need any other kind of loan. You can improve your credit score by paying all your debts on time, avoiding excessive credit checks, and understanding credit utilization ratios. Read more about improving your credit score here.
#4 Lower your debts
If you have debts, an achievable New Year’s resolution is to try to bring them down. Of course, each person’s debts will vary, which means debt recovery plans are very personal and unique. However, there are some common tips that everyone can use. First, pay off high-interest debts to limit the interest you will owe over time. This will save you money by reducing the extra interest you will have to pay. Similarly, you can pay off your smaller debts first to clear some debt easily and quickly. Plus, avoid taking out new credit cards or loans. Even if you don’t plan to spend a ton of money with a new card, you will likely end up spending more than you think. It’s best to avoid these extra expenses altogether!
#5 Draft a ten-year plan
Finally, a useful and achievable New Year’s resolution is to create a tentative ten-year plan for yourself. Depending on your current situation, you likely have certain goals and desires for what you want to accomplish in the future. This could be anything from buying a home, going on a vacation, retiring, paying off a mortgage, etc. Whatever the case, you can plan ahead and lay out a draft of what you want to do each year. For example, maybe you want to save a certain amount of money within year one. Perhaps you plan to move to a new home by year four, or increase your income by a certain percentage by year six. Your plan can include, and lead up to, anything you want, but do your best to keep it realistic!
Achievable New Year’s resolutions can be hard to come by, especially when they involve our finances. However, tailoring your resolutions to your situation is the best way to ensure you can accomplish them. Take some time to consider your lifestyle, your needs, and your wants, then you can create some goals that work for you! Plus, if any of your resolutions involve homeownership, you can enlist the help of a mortgage broker. This will ensure you achieve your goals as quickly and easily as possible.
If you have questions about buying a home or refinancing your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770, or contact us here.