When you think about New Year’s resolutions, what comes to mind?
For many Americans, a recurring annual resolution centers on health and fitness. In fact, 45% of all New Year’s resolutions prioritize getting into improved physical condition.
While gym memberships inevitably skyrocket every January, nearly 25% of Americans aim to read more books, 23% intend to take up a new hobby, and 16% endeavor to kick a bad habit.
Despite the uptick in ambition, experts claim that over 80% of New Year’s resolutions fail within a matter of weeks.
What’s the culprit?
Though there are many reasons, two stand out: resolutions dissolve from a lack of precision, and they collapse long before they become a habit.
After all, habits are famously difficult to break. So when you instill good habits, the sky’s the limit for your potential.
In this article, we’re going to focus on three resolutions to improve your financial fitness in 2022. Each of them are attainable, so long as you repeat them enough to become a part of your financial life and routine.
Resolution 1: Improve Your Credit Score
Strong credit promotes financial health.
It also provides access to a wide range of credit products with favorable interest rates and lower down payments.
Conversely, “less-than-perfect” credit can prevent you from getting access to the financial tools you need.
In order to improve your credit score, you first need to know where you stand.
To get started, go to FreeCreditReport.com and request a copy of your credit report and FICO® credit score.
While your credit score is a reflection of your all-encompassing credit report, be sure to comb through your report to identify any reporting errors or signs of fraudulent activity. If you find anything suspicious, you can file disputes through the Federal Trade Commission.
As for improving your credit score, there are two reliable ways to begin:
- Make credit card payments on time: Your payment history is responsible for 35% of your credit score. In other words, paying your credit card bills on time (or early!) will steadily raise your score.
- Don’t get overextended: Experts advise using less than 30% of your available credit (across all of your credit cards, not just one). The more money you borrow, the more likely your credit score will drop.
In 2022, commit to borrowing less and paying your bills on time. Your credit score will thank you!
Resolution 2: Generate Passive Income
The “gig” economy is a truly 21st-century phenomenon. While previous generations were mostly confined to work one job at a time, the modern world features unprecedented optionality.
In fact, more than 25% of all Americans are participating in the gig economy, whether working as part-time videographers, freelancing school teachers, part-time Uber drivers, or more.
While these are examples of workers with multiple forms of employment, they point to a growing trend in America: the pursuit of passive income.
And what is passive income? In short, it’s the money you make “while you sleep.”
More than ever, Americans are realizing the limitations of the nine-to-five workday. As a result, they’re seeking ways to earn money without actually working.
If that sounds too good to be true, it’s not! Passive income can come from a number of sources.
It can be a byproduct of a particular skill set. For example, if you’re a great vlogger and make compelling tutorials on YouTube, you can make a considerable income from clicks alone.
You can also generate money simply from renting out your home, apartment, or car.
Of course, the stock market is passive income personified. Click here for our complete introductory guide on investing.
On a grander (and more long-term) scale, you can consider investing in real estate to exponentially increase your returns.
However you decide to start, look for ways to further your financial future by exploring ways to make passive income.
Resolution 3: Build a Budget
Budgeting is like going to the gym.
While there are countless machines and pieces of equipment to choose from, the most important thing is that you actually use them.
The programs, the trainers, and the apps are all important and innovative, but ultimately, they can’t force you to lift those weights or run that final mile.
Only you can do that.
When it comes down to selecting and committing to a budget, you really can’t go wrong. The only criterion that matters is whether or not the budget helps you achieve your goals — whatever they may be.
If you search Google for “New Year’s budgets,” you’ll be bombarded with countless versions of the same general piece of advice: whichever strategy helps you cover your essential expenses, enjoy the occasional “treat,” and put money in the bank, use that!
At uLink, one of our favorite budgets is the “50/30/20 Rule,” where 50% of your income goes to bills (like rent and credit card payments), 30% of your income goes to the “fun stuff,” and the last 20% goes straight to the bank or IRA/401(k).
It’s a great budget because it’s flexible. If you want to put away more money, then put 30% in your savings accounts. Or, if you moved into a new apartment that requires more of your money, dedicate 60% of your income to your essentials.
However you decide to budget, the most important factor is that you remain consistent.
After all, a repeatable budget provides the means to pursue every other area of your financial life, whether that involves starting an emergency fund, tackling student loan debt, or setting aside more money for retirement.
In other words, budgeting provides financial freedom.
At uLink, we recognize that while you’re busy preparing for the new year, you’re also supporting your loved ones.
Your commitment inspires us every day.
That’s why we do everything we can to provide great exchange rates and fees starting as low as $0, so you can send more money home than ever before.
Miles from home — just moments away with uLink.