As we move into the new year, it’s important to reflect on our life in 2016 and find ways we can improve it this year. For many of us, January of 2017 seems like a reboot — a way to look at our lives with renewed energy and focus.

We all have different lifestyles, different income levels, and different financial goals. But nearly everyone reading this article can share some common resolutions. Building financial freedom is a long process; it’s a marathon, not a sprint. So, while the concept of New Year’s resolutions can be invigorating, understand that these resolutions must turn into habits if they’re to have any sort of lasting impact on your future.

With that said, here are four financial New Year’s resolutions for 2017.

1. Reduce Debt

This may seem common-sense, but it really is number one: work on reducing or eliminating your debts.

Debt comes in many forms, be that student loans, credit card balances, car payments, or a home mortgage. Conventional wisdom would dictate you focus your efforts on the most damaging debts, like high interest credit card balances or private student loans. It’s important to understand the massive psychological impacts of carrying debt, and the corresponding benefits of reducing it.

Maybe you have a small bill that you’re paying off monthly. It’s not a particularly high interest rate, and it’s not a large balance, but it annoys you. The satisfaction of having that struck from your balance sheet can have a huge impact on developing strong financial habits.

No matter how you do it, be consistent about paying down debt. Set up automatic transfers from a checking account, or schedule payments as soon as income hits your wallet. Making one-off payments here and there can be mentally draining and easy to forget or ignore. A consistent cadence, however, can bring peace of mind and a sense of organization and purpose.

Related: How to Save More Money with Less Effort

2. Increase Cash Flow or Assets

Many of you will receive a pay raise this year. Think very critically about how you set aside that money. If you’re fiscally irresponsible and have a tendency to spend, consider an increase in a paycheck withdrawal into a 401(k), health savings account, or IRA. Consider other avenues to increase your net worth as well. This might be a time when you need to be proactive about things like a career change, a move to an area with a better cost of living, or looking into side projects that can earn you money.

A lifestyle change might even be in order. Maybe you trade in your luxury car for a cheaper, more reliable vehicle. Perhaps you consider eating out less, or any of the other popular (and sometimes cliché) resolutions. Again, be consistent and deliberate with how you go about this.

These two resolutions can combine into one simple one: increase your net worth in 2017. The combination of debt and cash flow make up your net worth. While it’s possible to both reduce debt and increase cash flow, if it makes things easier for you, just pick one and focus on that.

Learn More: How to Develop the Habit of Spending Less Than You Make

If you change nothing with your income, but cut your grocery and restaurant bill in half each month, you’ll still be increasing your net worth. And once you feel consistent and in control of that one resolution, you can add more, understanding that you have the willpower and capability to check them off.

3. Develop or Refine a Plan

Financial planning isn’t particularly difficult on a personal level. A budget can be drawn up with little effort, and you can gather a snapshot of your financial state fairly easily. Taking a look at credit card statements, paycheck stubs, and receipts can help you understand the money you’re bringing in and where it’s going. At its most basic level, a financial plan can simply be a budget, so long as you stick to it.

So, if you don’t have a budget, start there. Define as many categories as you feel necessary to accurately portray where you spend your money. Then, understand how much money you pocket each month, and where that money ends up going. Finally, establish your spending limits in each of those categories, so that the amount of income you earn each month is less than what you spend.

Now comes the hard part: sticking to those numbers over the next week, month, year, and decade.

Inevitably, the hope is that your budget evolves, enabling you to direct your income to other areas. Your plan will regularly need refining. The worst thing you can do is to make lifestyle changes that increases frivolous spending.

Look at, and really evaluate, the resolutions above: to reduce your debt and increase your assets. Are you debt-free? Are you maxing out a 401(k)? How about an IRA, or maybe an HSA if you’ve got one? If you have kids, are you contributing to a college savings plan, or are you otherwise setting aside money for their future?

Resource: 8 Black Belt Budgeting Tips

Even if you’re lucky enough to be checking all of these boxes, you can still continue to build wealth through other taxable accounts. Refine your plan over time so that it maximizes your contributions to your net worth.

Remember that a great financial plan is only as good as the person following it. Hold yourself accountable for your decisions. It may even be worth sharing your financial goals with a significant other, close friend, or family member. Revisit your plan frequently and develop financial habits that reflect your objectives.

4. Live Healthier — Mentally and Physically

Healthier lifestyle habits can have the most profound impact on your future. Improving yourself physically — for example, with more time at the gym or healthier eating habits — can boost your confidence, happiness, and self-esteem. Becoming mentally stronger can change your outlook on what’s possible for you and your future.

There can also be significant financial benefits to these kinds of lifestyle changes. Healthy eating means less fast food, which is a common financial vice. It also might mean fewer trips to the doctor or dentist, or a less expensive health insurance premium. Building mental health can open up new opportunities, or simply reduce the amount of stress in your daily life. And that is invaluable.

Forward Progress

No, 2017 might not be the year that you reach the summit, achieving “financial freedom.” Building wealth takes time, patience, and effort. It starts with laying the proper foundation, taking those first steps, and then following through.

At face value, these resolutions seem simple… perhaps even too easy. However, the simplest resolutions can often be the most difficult to achieve. Start here, building the basic habits that will follow you throughout the years. You’ll be glad you did.

I hope you’ll join me and many others who are looking to lead a fulfilling life, financially and personally. Here’s to health, wealth, and happiness in 2017!

The post 4 Resolutions to Help You Achieve Financial Freedom in the New Year appeared first on The Dough Roller.

via Finance Xpress