There are many popular New Year’s resolutions that people make regarding money. You may have decided that 2012 will be the year that you earn more, spend less, start saving for retirement, pay down your debt, or any number of other things. There is one very general resolution that does not sound very grand or exciting which can help you to take many different kinds of steps forward in the personal finance department. Have you considered “make better financial choices” your money resolution for next year?
You may or may not have heard the old saying “if you do what you have always done, you will get what you have always gotten”. Wise words, for sure, and it is easy to see their truth when it comes to dollars and cents. If you continue to make the same choices regarding your finances as you have in the past, your financial situation will remain approximately the same. This could be good or bad, depending upon what your current state of affairs is.
If you are looking to improve your financial situation, there are a few things that you can do to improve the choices that you make regarding your money. Two important things that provide essential information that you will need to make good financial decisions are knowing where you are at and where you would like to go. If you take the time to map out your current financial situation – all of the income, expenses, and debts, and establish a basic monthly budget for yourself or your family you will have an accurate point of reference from which to make decisions. For example, you can glance at your budget and compare it to your income to see whether you can pay all of your bills for the month and accommodate a new whatever it is that you have been wanting without putting it on a credit card. Knowing your financial goals gives you another important reference point to use when you are making financial decisions. If one of your goals is to save up enough money for an international vacation next year, you may think twice about running out to buy a new television if you have money left over at the end of any given month.
Knowing where you are at and knowing where you want to go are like the map and compass of financial decision making. It is important to know where you stand when you make a decision regarding money, and it is equally important to know what you want to be able to accomplish with your money. Taking the time to figure out those two things puts you in a position to make better financial decisions than you have in the past, and thus improve your financial situation.
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