It’s 2010! There’s never been a better time for new beginnings, a time to quit your old bad habits and change for the better. Common New Year’s resolutions such as dieting and exercise are not always easy to follow and they certainly aren’t fun. But you’ll reap the rewards for years to come if you are able to stick to it!
What components of your personal financial plan need updating or improvement this year? With the uncertainty of the economy these days, 2010 might be the year some of you establish a financial plan for the very first time. Where do you start? To help you establish a financial New Year’s resolution, SheKnows offers a checklist of the most important components of a personal financial plan:
1. Credit Management
If not for high-interest credit cards, American household finances would be a lot healthier. While ‘plastic’ is certainly more convenient than carrying cash, the money you spend on interest could be put to much better use. This year, make a resolution to allocate a little more money towards the outstanding balance of your credit card and don’t be content with only paying the minimum amount required. But your New Year’s resolution on credit should go further – make it your goal to pay off high-interest accounts first.
2. Household Budget
It might seem simple but this important task is often overlooked. Establishing a household budget (and sticking to it) can help you avoid overspending and unnecessary credit usage. By knowing exactly where your money is going, you may be surprised to find out what your monthly ‘unnecessary’ expenditures add up to… $700 on restaurant, how about you start packing a lunch!
3. Emergency Savings
Last year the economy hit hard, but we are not recession free just yet. How long could you manage to pay your bills if you were temporarily out of work? As a general rule of thumb, you should have enough funds to keep your household afloat for 5-8 months. (Yes, we’re serious!) It doesn’t have to be cash in the bank, the same purpose could be served using a credit line or short-term investments that can easily be sold to generate cash.
4. Property and Liability Insurance
Every year at the very least, take a careful look at your auto and homeowner’s insurance. Make sure you’re carrying more than the minimum liability limits for auto insurance. For example, the Colorado minimums aren’t enough to cover the costs of a serious car accident today so be sure to check what your state minimums are and ensure you are fully covered. It’s a good idea to also look at your homeowner’s limits and if it has kept pace with the increased value of your home. If you’re a renter, consider buying renter’s insurance – it’s very affordable and can save you a bundle in the event of a theft or if you’re sued for an injury on your premises.