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Resetting your financial resolutions

Many of us make New Year's resolutions only to have them fail shortly into 2021, but it isn't too late for a resolution reset.

SAN ANTONIO — It can be a shock opening the first credit card bill of the year.

“A lot of people start the new year realizing that they spent way too much over the holiday and they really need to cut back,” said Andrea Woroch, a money-saving expert.

And yet, many of us give up on our resolutions by the end of January. Woroch looked at five common financial resolutions and explained how to reset them for success. 

Number 1:  I am going to do a no-spend month. 

Woroch said it can become overwhelming to cut every discretionary expense at one time. Instead, she recommended being precise about what you will stop spending on.

“For instance, let’s say you spend $500 a month on groceries,” said Woroch. “Maybe you’re going to try to cut back to $400 a month.”

 She also recommends scaling back in increments. 

“Something that I’ve had success with is doing a no-spend day every week,” Woroch said. “At first it might seem a little bit tricky, but you’ll get into the habit of not spending that day every week and it can really help you cut back.”

She recommended using these resources to help you spend less:

  • BillCutterz negotiates your bills for you.
  • Trim identifies and cancels unused subscriptions and memberships.
  • Cently adds coupons automatically at check out.

Number 2: I am going to create financial security for my family.

“I think the past year, 2020, taught us that life is full of uncertainty,” Woroch said. “A lot of people lost their jobs, had hours reduced or got slapped with unexpected medical bills.”

You will need more direction on how to create that security. Instead, set these goals:

“This would include building your emergency fund, trying to save up to three to six months of living expenses,” she said.

She also suggested making sure you have term life insurance.

“It’s a small price to pay for peace of mind because you need that there in case something happens to you,” Woroch said. “So your spouse or partner has some income coming in to pay for bills, to pay for your basic funeral costs and also pay off an debts that you may have been carrying because you don’t want that to get passed on to other family.”

Plus, be sure to create a will or trust. Include a power of attorney and health directive.

“Having all these things set up is just going to create that security and allow you to stress less about the what if’s,” she said.

Protect your family with these resources:

  • Bestow is a life insurance company that eliminates medical exams by using artificial intelligence and data to shorten underwriting from months to minutes.
  • TrustandWill.com sets up a will for $89 and includes power of attorney, health directives and guardianship.

Number 3:  I am going to save more money. 

It is better to know what you are saving for, how much you will save and by when.

“A better goal than just trying to save money is to actually make some extra money,” Woroch said. “Boosting your budget, finding ways to increase your income is really the best way to get ahead financially. There are actually so many flexible side hustles you can do right from home.”

Do part-time work using these sites:

Number 4:  I am going to pay off debt and improve my credit. 

Debt can feel overwhelming.

“A lot of people say I want to pay off all my credit card debt this year, but it might be more than they can really afford to pay off, especially when you’re living on a tight budget,” Woroch said.

Start by improving your credit score instead.

“Having a better credit score opens up doors to so many possibilities,” she said. “First of all, you need a good credit scores to rent an apartment. You need a good to excellent score to get approved for a mortgage loan for the best, lowest interest rate. 

"The lower your interest rate, the more money you’re going to save, the lower your monthly payment, the more money you’ll have towards lifestyle needs or paying off your debts.”

Woroch suggested getting a credit builder loan. It is a loan typically for a small amount that has fixed monthly payments. The money you borrow is set aside for you in a secured savings account while you pay off the loan. 

Once you pay off the loan and interest, you get the funds. It also helps you build credit.

“It is a great way to rebuild your credit and also save money at the same time,” Woroch said.

Rebuild your credit with these resources:

  • Self offers credit builder loans.
  • Debt Free is an phone app that tracks how you pay off debt using the snowball method, which focuses on paying off the smallest balances first.

Number 5: I am going to cook more. 

That could lead to overspending on groceries.

“Then you end up throwing groceries in the trash,” said Woroch. “Not to mention you come home, spent $200 at the grocery store and now feel like you don’t have anything to cook for dinner. I think we’ve all experienced that.”

Try this:

“Tell yourself, 'I’m going to meal-plan,'” she said. “That’s a much better goal to set for yourself. Meal planning gives you the opportunity to be really specific about what you’re to buy at grocery store. It ensures you’re only buying the ingredients you need for the meals you’ve planned out for the week. This also reduces food waste because anything that you throw in the trash; that’s just like throwing dollar bills in the trash.”

These resources can help you meal plan:

There is a key to setting and keeping a financial resolution:

“Being really specific about the habits that we want to build into the our and starting from a place of understanding what our habits already are,” said Andrea Ferrero, who teaches financial literacy with Pockets Change.

If you have a question for Eyewitness Wants To Know, email us at EWTK@kens5.com or call us as 210-377-8647.