5 New Year’s Financial Resolutions For Beginners To Build Better Financial Habits In 2022


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If your goal is to develop better spending habits next year, consider these tips for reaching your short- and long-term goals. (iStock)

The new year offers a fresh start, especially after an unpredictable 2021 that hit the finances of Americans in a number of ways. Record inflation have impacted shoppers at the gas pump and grocery store, and supply chain issues have made it more expensive than ever to purchase certain products like new vehicles and furniture.

Fortunately, interest rates were close to historic lows for much of the year, giving US consumers the opportunity to fight rising prices. If you’re looking to develop better financial habits in 2022, consider the following New Year’s financial resolutions:

  1. Budget and track your progress
  2. Take control of high interest credit cards
  3. Monitor and improve your credit score
  4. Make a plan for your student loan debt
  5. Save on interest with mortgage refinancing

Learn more about each New Year’s Resolution in the sections below, and visit Credible to compare offers on a number of products to help you reach your financial goals.

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1. Make a budget and track your progress

Creating a monthly family budget can give you insight into your spending priorities and help you change your financial habits to better meet your financial goals. A good place to start is to follow the 50/30/20 budget rule:

  • 50% of your income should be spent on necessary expenses like paying for housing, utilities, groceries, and child care.
  • 30% of your income should be spent on discretionary expenses like entertainment, restaurant meals and concert tickets.
  • 20% of your income should be spent on savings and debt repayment.

Gone are the days of combing paper bank statements to monitor your budget. There are plenty of free budget apps available on your smartphone, such as Mint, PocketGuard, and Personal Capital, that can help you start budgeting and automatically track your spending by logging into your bank accounts.

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2. Take control of high interest credit cards

Making the minimum payment on your credit card balances is a quick way to accumulate expensive debt. Credit card interest rates are near all-time highs at 17.13%, according to the Federal Reserve.

Ideally, you should be able to pay off your entire credit card statement balance each month to avoid paying interest entirely. But the reality is that revolving credit balances have skyrocketed over the past year, which means consumers are counting on on high interest credit card debt to make ends meet.

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If you’re struggling to manage your credit card debt, consider the following debt repayment strategies:

Debt avalanche method. It is a financial strategy in which you pay off the credit card with the highest interest rate first in order to save the most money while getting out of debt. Alternatively, the debt snowball method is to pay off the card with the smallest balance first to gain momentum.

Balance transfer card. Consumers with good credit may want to consider purchasing a balance transfer credit card with a lower interest rate to pay off their debt on better terms. Some credit cards offer a 0% APR introductory period, which effectively allows you to pay off your credit card debt for a set period of months without paying interest. Keep in mind that you may need to pay a balance transfer fee of around 3-5% of the total amount. Visit Credible to compare balance transfer offers for free.

Debt Consolidation Loan. This is a type of unsecured lump sum personal loan that allows you to pay off your high interest credit card debt in fixed monthly installments over a set period of time at a lower interest rate. Personal loan interest rates are near all-time lows of 9.39%, according to the Fed. You can view the interest rates of debt consolidation loans without affecting your credit score on Credible.

Bonus tip: Contribute to your emergency fund to avoid becoming dependent on credit cards to cover unforeseen expenses. Most experts agree that your emergency savings should cover between 3 and 6 months of expenses.

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3. Monitor and improve your credit score

Having a high credit score can help you get the best deals when borrowing all types of credit, from mortgages to student loans. Good credit may also be needed to rent an apartment, buy a car, and secure reasonable insurance rates.

Credit monitoring is a crucial part of building strong credit history, as it can alert you to fraudulent activities and expenses before they get out of hand. Additionally, credit monitoring can help you determine where you can improve your credit score, such as lowering your credit usage rate or improving your payment history on time.

You can sign up for free credit monitoring services through Credible.

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4. Make a plan for your student loan debt

Student loan debt is a heavy financial burden for many young consumers. More than 43 million Americans have student loan debt with an average balance of $ 39,351, according to Education Data Initiative. In fact, 1 in 3 millennials said in a survey that student loans prevented them from buying a home.

One way to manage your student loan repayment is to refinance it at a lower interest rate. According to data from Credible, fixed student loan refinance rates are at an all time high, meaning borrowers have the opportunity to save more money than ever before.

Refinancing a student loan can help you lower your monthly payments, pay off debt faster, and save money on interest over the life of the loan. Borrowers who refinanced to a shorter loan term on Credible were able to save almost $ 17,000 on their student loan debt.

Keep in mind that refinancing your federal student loans into a private loan will make you ineligible for government protections such as income-based repayment plans, COVID-19 administrative forbearance, and certain student loan waiver programs. .

You can browse the student loan refinance rates from private lenders in the table below and visit Credible to see your estimated rate for free without affecting your credit score.

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5. Save money on interest with mortgage refinancing

A A recent Zillow study found that homeowners are at risk of missing out on the opportunity to save over $ 300 on their monthly mortgage payments by not refinancing.

That’s because mortgage rates hit historic lows in 2021, according to Freddie mac. In January, the average rate on a 30-year mortgage was 2.65%. The 15-year term mortgage rate, which is popular among homeowners refinancing, hit a record low of 2.10% in July.

Although mortgage rates have risen since then, many homeowners still have an interest in refinancing at a lower rate than they are paying on their current mortgage. And with the Federal Reserve forecasting up to three rate hikes in 2022, it’s important to act as soon as possible before mortgage rates rise further.

If you are considering refinancing your mortgage to save money, visit Credible to compare mortgage refinancing offers from several lenders. This way, you can get the lowest possible rate for your financial situation.

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Have a finance-related question, but you don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.

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