Five smart financial resolutions for 2012

Every year people make financial resolutions to bring in the New Year. The problem however is that come March, the goals and aspirations people swore they would stick to have all but vanished.

So without trying to be over ambitious, here are five must do financial resolutions that will make 2012 a great year to remember for your personal finances.

1. Get yourself out of bad debts

Credit cards can be crippling. Making the minimum repayment on $10,000 worth of debt can take a huge chunk of your fortnightly pay. This year focus on paying well above the minimum repayment whenever possible. (More from Moneyhound: Credit card survival tips)

The best trick is to make small but consistent payments whenever you login to your internet banking. Most people just pay one big chunk once they get paid, instead pay a big chunk and also make smaller repayments to round your bank account balance each day. For instance, if you have $312.56 in your everyday account, why not shoot across a small extra repayment of $12.56 to round your account to $300. These baby steps have great potential to make inroads into your debt repayment.

Alternatively think about transferring all your debts to a lower rate card. Some credit cards offer as little as 0% interest for the first 6 months so that you can get your finances back on track and pay down your debt more easily. Compare all the balance transfer credit cards in the market at Moneyhound.

2. Live within your means for once

No one really understands living within your means these days. By living within your means, it means (pardon the pun) that you should not spend more than you can fully repay each month in cash. No credit cards, no redraws on your home loan – focus instead on living within your desired budget so that you never have an option but to use your own cash. (More from Moneyhound: How much does your alcohol habit cost you?)

No you don’t deserve that big flat screen TV, no you haven’t earned the luxurious car – if you haven’t saved for it, you haven’t earned it. Try living within your means and you will quickly realise how hard it is.

3. Save an emergency fund/war chest

How sick are you of hearing people tell you to start an emergency fund? Well why not build a war chest instead.

The phrase ‘war chest’ was used in days gone by to describe a reserve of funds used for fighting a war. You may not be at war with a country, though you are at war with your finances. You want to win and prove that you are the stronger competitor.

A war chest will give extra money for the following year to either have a buffer should you lose your job or give you the ability to be ready for an investment you want to take hold of. Compare high interest saving accounts at Moneyhound and open one today.

4. Cut corners on expenses

Have a close look at your fortnightly and monthly direct debits. Often after a year of consumerism people find themselves with mobile debits, pay TV debits, internet debits, iTunes purchases and more. Look to cut as many as possible or at least switch to find a better deal and reduce the outgoing amount. (More from Moneyhound: Ditch these eight things and save money)

5. Think about your retirement

The boring old financial planner advice. You don’t have to sit there and ponder your retirement and create a serious game plan – all you need to do is be conscious of your retirement. This means consolidating your multiple superannuation accounts, adding slightly extra whenever possible (ideally through salary sacrifice) and making sure your super account provider isn’t ripping you off in fees.

Every second is vital to your superannuation funds so get it organised today and then you can forget about it.

Source: Alex Wilson, writer for Savings Guide