As we begin 2014, individuals are no doubt considering what resolutions they should make. The usual resolutions of exercising, eating right and saving more money are often listed, however; they are broken days or weeks into the new year. The common reason that these resolutions are not upheld is due to a lack of discipline. Although it takes discipline to stick to personal financial related resolutions, individuals can use a variety of tools to improve the chances of living up to your money management expectations.
Here are five tools to be familiar with if you wish to stick to your financial new year’s resolution.
Almost all personal financial related resolutions often involve a budget. Whether it be establishing a budget or keeping in line with one, it is important to have a listing of the money that is coming into and leaving your bank account. If you have a computer, you can use an Excel spreadsheet to record your revenues and expenses. Using a spreadsheet will allow you to see where your money is going on a monthly basis. If you do not have access to a computer, use a notebook where you can write down your budget. For some, creating a budget will be difficult to do because there may be a lack of information on certain expenses such as food and utilities, consider using the month of January as a period to gather information start adhering to the budget in February. This entails keeping all your bills and recording the amount of money spent on monthly goods that have been consumed.
2. Access Online Banking
Having access to your bank statements when needed is a tremendous help when trying to respect your personal financial new year’s resolution. Knowing at all times how much money is in your account can empower you to reduce spending in fear of having very little money to pay for basic items and eventually use credit on a regular basis. With this in mind, you should set a limited amount of money in which you are willing to use before having difficulties with debt. (For those who have a full time job, you should have one paycheque amount of money in your account at all times.)
3. Automatic Virtual Bank Account Transfer
For individuals that are looking to build savings for the future, using an automatic virtual bank account transfer is a perfect tool. Using a virtual bank will allow you to withdraw money from a chequing at your traditional bank and deposit into a savings account with a higher interest rate. Based on the money that is coming in on monthly basis, you can decide on how much cash that should be transferred and at what frequency. For example, if you can afford to lock away $50 per month, you will have $600 plus interest, assuming that no withdrawals from the virtual bank account are done through the year. (Tip: Consider this type of savings strategy as a “tax myself” approach that will benefit you in the long term.)
4. Automatic Credit Card Payment
Another common personal financial new year’s resolution that individuals find difficult respecting is paying down their credit card balance. While the best approach is to have the exact amount of cash in your account to pay off the debt, consider using an automatic credit card payment system. This system will prevent you from ignoring your responsibility of paying your bill. You can decide how much you would like to pay and from what type of account (savings or chequing).
5. Tax Free Savings Accounts
As the name suggest, Tax Free Savings Accounts (TFSA) is a tool that allow individuals to place money in an account in which both levels of government cannot tax. With a maximum deposit amount $5500 per year, you can automatically transfer money (which would stay in your saving or chequing account) to earn interest. To really benefit from a TFSA, you should deposit money that is intended for the long term. To apply for a TFSA, visit your local bank branch.
While it may be easy to list a number of personal financial new year’s resolutions, they can be difficult to execute them over a long period of time. To assist in achieving them, it is best to take advantage of tools that can be found online and offline.