Like physical fitness, financial fitness is the product of a continual process. You won’t achieve it overnight or by happenstance, but by making responsible decisions on a daily basis, working hard and adhering to a well-crafted plan. You also won’t achieve it if you let time constraints get in the way, or you procrastinate.
But why wait, whether for the new year or otherwise, to begin making positive life changes? Waiting only helps reinforce bad habits and, ultimately, makes it even harder to accomplish your goals. So in addition to going easy on the treats this holiday season, consider incorporating the following financial habits into your routine.
1. Review account statements for errors and budget slip-ups. Strive to set aside at least a couple hours each month to review your bills and assess whether you’re meeting your financial goals. Living within your means should be your primary objective.
If you find that you’re overspending — whether as a result of being unable to pay your credit card bill in full or seeing your savings dwindle rather than grow — you’ll need to prioritize your monthly expenses and determine which luxuries you can eliminate to return your budget to sustainability. Remember that no recurring expense is too small to consider in this exercise, especially when you extrapolate the cost over a year. Cutting $25 from your monthly cellphone bill by limiting unnecessary data usage, for example, might seem relatively minor, but it would save you $300 over the course of a year. What’s more, you could save well over $1,000 in a year by spending $5 less on specialty coffee drinks and snacks each workday. Every one of us has a few such expenses that we could stand a break from.
2. Never miss a due date. Failing to pay bills on time is perhaps the easiest, most avoidable way to damage your credit score. While creditors typically won’t report a late payment to the credit bureaus until it’s at least 30 days past-due, negative notations about such payments will remain on your credit reports for seven years.
Setting up automatic monthly payments from a deposit account — for at least the minimum due, in the case of credit cards — is the best way to preempt lateness. Just keep in mind that automatic payments won’t be processed if you don’t have enough money in your account, so you might want to request a different due date for some bills to improve cash flow.
3. Eat well and exercise. Taking control of your financial future will benefit your health, considering that money and finances have been America’s top stressors since 2007, according to the American Psychological Association. But that’s far from the extent of the personal finance-wellness connection. Improving your diet and incorporating exercise into your daily routine will also help you reduce long-term medical costs, obtain better insurance coverage at a lower price and improve personal productivity.
4. Be proactive about identity theft prevention. There are a number of things you can do to make yourself a tougher target for identity thieves. This includes using strong passwords and changing them regularly, shredding financial documents before throwing them away, making a credit card your primary spending vehicle (in light of the $0 fraud liability guarantee) and regularly reviewing your major credit reports.
In addition to a growing number of services that offer free credit reports and free credit monitoring, you can avail yourself of your legal right to a free copy of your Experian, Equifax and TransUnion credit reports once every 12 months through the government-sponsored website AnnualCreditReport.com.
5. Build emergency savings. Setting aside a portion of each paycheck for a rainy day might not seem like the most insightful money-saving advice, since it won’t reduce your short-term costs or free up any room in your budget. But it will help prevent unexpected monetary burdens — medical expenses, car repairs or job loss, for example — from sending your financial life into a tailspin.
With a suitable financial safety net in place — personal finance experts recommend gradually stowing away six to eight months of take-home pay — you won’t be forced to rely on debt for everyday sustenance or incur the credit damage that accompanies missed payments and delinquency, should unforeseen difficulties befall you. Having some money in the bank will also afford you more choice when it comes to things like leaving a job you aren’t satisfied with.
At the end of the day, effective financial management is all about optimistic realism. You need to be growth-minded and believe in the promise of the future in order to prioritize long-term goals over short-term desires. But you must also put yourself in a position to succeed when things inevitably don’t go as planned. Keep this in mind over the holiday season as you begin laying the groundwork for a financially successful 2016. Good luck!
More from U.S. News
10 Money Action Steps to Take Before 2016
10 Ways to Stay in Shape on a Budget
5 Money-Saving Exercises to Achieve Financial Fitness originally appeared on usnews.com
