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Money Makeover: 6 Steps To Make 2016 Your Best Year Yet

girl setting financial goals for 2016
Don’t resolve to go on yet another diet; instead, make a goal to get your finances in the best shape ever.

With the simple flip of the calendar year, motivation levels shoot sky-high. People are working to kick bad habits, finally signing up for that Pilates class, or asking for an overdue raise. Resolutions are mapped out with the best intentions.

But while diets rarely last past February and gym memberships often go unused, there are financial steps you can take now to actually see a tangible difference in your financial situation come 2017. Heed the tips below and make this the year you get even closer to being able to afford that dream home for sale in Austin, TX.

Get (re)acquainted with your existing financial products and services

For most people, once accounts are established with specific companies or financial institutions, they stop shopping around for better rates or lower fees. But what was the best deal five years ago is probably not the best deal today, and staying with a service out of convenience can cost a bundle over the long run.

Look closely at the fees and practices of your current bank and find out if you could benefit from switching. Go a step further and examine your other services — like cable and insurance, for instance — and find out if you could cut your monthly bills by ditching your current provider.

Check in on your investments

When it comes to investing, many people take the “set it and forget it” mentality a little too far and end up with returns much lower than the market suggests they should be or paying fees so high, they take a massive chunk out of returns.

Perform an annual audit of your accounts, ensuring your asset allocation is appropriate for your age, your savings rate is sufficient, and your fees are in line with, or below, industry averages.

If you don’t know where to start, there are plenty of resources online to help you compare fees or calculate if you are on track with your savings. Two resources to start with are Brightscope to compare 401(k) fees and Kiplinger’s retirement saving calculator.

Examine the health of your emergency fund

If you had an unexpected hospital visit or car repair, would you have the cash on hand to cover the cost? If your emergency fund is dangerously low, you’re not alone. Unfortunately, when costly, unexpected events occur without the safety net of an emergency fund, debt can accumulate, bills can go unpaid, and black marks can appear on a once healthy credit report. If your emergency fund needs an extra cushion, create a plan for putting away the money before disaster strikes.

Pull your credit report

A 2012 study conducted by the Federal Trade Commission found one in five consumers had an error on at least one of their credit reports from the three credit-reporting agencies (Experian, TransUnion, and Equifax). One in four consumers had errors that could have a negative impact on their overall credit score.

So while you may think you know exactly what’s on your credit report, it’s not worth leaving it to chance — especially if you’re considering purchasing a home in the near future. Each credit-reporting agency mentioned above is required to give you one free credit report annually, upon request. Make a note to pull a new report from one agency every four months.

Create a 2016 spending plan

If the term “budget” makes you break out in hives, call it a spending plan: a way to tell your money where to go instead of wondering where it went. This requires understanding your set expenses — your rent or mortgage, utilities, insurance, etc. — and taking a close look at your variable expenses. Are your variable expenses reasonable? Is one expense placing unnecessary pressure on the rest of your spending? Once you’ve mapped out your spending for the year, you can find an app to make the entire tracking process that much easier this year.

Get specific about short-term and long-term financial goals

Financial goals are the road map to get you from point A to point B. Without them, you are likely to wander without a firm grasp on where to go and how to get there. Increase your chances of reaching your financial goals by getting as specific as possible with the what, when, why, and where. Have you been thinking about purchasing a new home? Do some research about where you want to buy, how much houses in that area are going for, and when you hope to make a purchase. From there, you can establish exactly what steps you need to take, and in what time frame to reach your goal.

How are you going to make 2016 your best year yet? Tell us in the comments!