My New Year's Resolution to Improve My Finances

My resolution for 2010 is different than in years past. For once, I'm not resolving to lose 20 pounds. Instead, I've promised myself to be smarter with my money and invest in my family's future. I realize I sound like a commercial, but I believe my goals for 2010 won't be much different from those of many other Americans. I'm committed to taking better care of my finances this year and I've got a five-part plan to do it.

#1: Change How I View Credit

Credit cards enable me to spend more than I make, which sets off a cycle of week-to-week paycheck living and constant debt pay-offs. Just when I get close, I rack up another bill. Part of my problem is being irresponsible and the rest of my problem is the way I think about credit. It's there for a convenience, as a way to stretch myself beyond my means, but it shouldn't become a crutch. Instead of a credit card, I need an emergency fund to get through the tough times. After all, emergency funds don't charge high interest rates and fees when you use them.

#2: Keep a Closer Eye on Things

Wasting money on financial mistakes can undo any of the positive strides I might make, so I'll need to be diligent in my budgeting. I already use an Excel database to track bills and expenses, but it's still possible to make errors from time to time. Unfortunately, one slight misstep can lead to an avalanche of bank fees... and I've done that once or twice before. By tracking my expenses, I'll eliminate the chance of this happening.

#3: Save a Little Every Day

There's lots of little ways to save every day, even by cutting out something as small as buying lunch during the work week. Sticking to grocery lists, curbing credit card purchases, and weeding out unnecessary charges on my utility bills, I can save hundreds a year. Putting that money to work for me, in an ING Direct or other high-interest rate savings account, those saved odds and ends could become a sizable account by 2011.

#4: Improve My Credit Score

Part of insuring a successful financial future, a credit score can be a great help or a tremendous detriment. This magic three-digit number, which ranges between 300 and 850, is used when applying for everything from a cell phone to a new car to a mortgage. Saving money for big purchases won't help me at all if I can't get approved in the first place.

By paying down credit card debt, making payments on time, and keeping a handful of rotating accounts in good standing, I hope to boost my score over the next twelve months.

#5: Focus on the Future

Anytime I feel that familiar urge to pick up a new pair of jeans or ignore my budget, I'll try to keep my focus on the future. By saving and investing, upping my credit score, and being a diligent budgeter, one or two years of hard work and sacrifice could build the cash cushion that I'll need for the years to come.

References:

• Grant, K. (2008, December). "Financial Resolutions for the New Year." SmartMoney.

• Taylor, D. "Financial New Year's Resolutions." Yahoo! Finance.

• Zweig, J. (2009, December). "Saving Is Something You Should Do Every Day." Financially Fit.