As the New Year begins, a lot of people are looking back at 2011 in order to reminisce and plan for a better 2012. Although resolutions are a good idea in theory, they aren’t going to get you out of financial debt.

The best way to make a difference in your life is to set goals you know you’ll be able to meet through a little self-discipline and determination. Here are some sure-fire ways to get you back on track financially in 2012.

The more specific your Money Goals for 2012, the more likely you will be able to fix them. Most people want to pay off certain debts or be wiser about spending. It may seem easiest just to say, “I will be financially smarter in 2012,” but you have to define the problem and how you are going to fix it.

Set Up a Year Long Budget

This is probably the easiest goal to meet because it will take you the least amount of time. Regardless of what your money goal is, you should probably set up a budget to have a better understanding of your spending. Take a weekend day and set aside a couple hours to put together a monthly budget for 2012. Here are things you should include but might forget:

  • Emergency fund transfers — your emergency fund should be equal to 3-6 months’ salary.
  • Travel (holidays, weddings, and etc.)
  • Gifts
  • Seasonal Purchases

A big help is figuring out things you want vs. need. It’s completely okay to spend money on things you want, just make sure to account for this in your budget. Even though you may have set up the budget for the year, this doesn’t mean you shouldn’t update it every two to three months to make sure your spending is on track.

Paying Off Credit Card Debt in Monthly Installments

A common goal would be to pay off your debt. Depending on how much you have, this may or may not be manageable in one year. The more realistic you are, the more likely you’ll meet this goal.

One of the hardest debts to pay off is credit card debt because of the unstructured nature of payments. It’s also the first place many people look to when trying to get their finances in order. You should first figure out how much money you need to put aside in order to pay down your credit cards within the year (or whatever time frame you have established).

Depending on how much you make a year and your expenses (i.e. rent, mortgage payments, and car payments), you should try and put at least 12.5% of your disposable income towards your credit card payments each month. If you set your percentage too high, you may not be able to keep up with the payments and get discouraged.

Spending $200 Less Each Month

Of course, the number you set is up to you.Whatever your reason for having extra cash in your pocket, you need to do some calculations first.

The best way to figure out how much you can put away each month is by looking where most of your money goes each week. There isn’t much you can do about set payments such as utilities and payments for your home, but you can take a look at how much you are spending on entertainment, clothing and other extraneous things you can cut out of your budget.

The problem with spending less each month is accounting for unexpected situations such as emergencies, events, and travel. If you did a good job with in the budgeting department, you should be good to go.

Paying for a…

It’s easier to set aside money for an expensive item than it is just save in general. Let’s say you have always wanted to take a trip to Italy, find out the exact cost of tickets, lodging and whatever else you’d want to spend on while you’re there. After you have made the calculations, tack on a little more money as a buffer – just in case prices fluctuate.

The best way to prepare for a big expense like a trip, car or new computer is to pretend like you’ve already bought it and you are paying off your credit card statements. Calculate how much time you have to pay for the item and put aside payments each month.

You are more likely to meet this goal because of the reward you get at the end.

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