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Top 5 Financial Resolutions for 2008

The new year is almost upon, so how about making a different kind of financial resolution this year? If money matters got you down in '07, why not commit to a better financial future next year. The following resolutions have the potential to set you onto the path towards financial freedom.

This is the key step. If you are not living below your means you will be unable to successfully fulfil other resolutions. To put it simply, you will not be debt-free if you spend more than you earn. Having money in the bank is also a huge psychological boost and will help you complete other resolutions.

Do whatever it takes to cut down on unnecessary expenses. When the credit card bill comes in every month, examine it closely. It's a good idea to go through each item on your bill and tick off the essentials - groceries, electricity, fuel, etc. Then you can effectively ignore these items and focus on the non-essentials, since it is usually here where you can make the biggest savings of all.

Cutting your cost of living is not an easy process, and it may require a lot of discipline to achieve success over time, but the results are worth it. The most effective way to achieve this is to change your mindset. Every time you are about to purchase something, ask yourself - "Do I really need this?". If the answer is no, then put your credit card away.

Of course, there's no point in cutting out expenses if it makes you completely miserable. Therefore, it helps to identify key areas of your expenditure which could be reduced without it dramatically affecting your lifestyle. For example, instead of going out every Saturday night and catching a taxi to the club/pub of your choice, drive yourself in and limit yourself to a couple drinks. You'll be surprised how much a night out on the town can cost. First there's transport, which could be $20 each way, then entry to the venue, then the drinks and/or food. All up it's easy to spend over $100 every time you go out. If you did this once a week, you'd end up burning through $5,000 every year. That's a considerable portion of your wage, and it should be treated as such.

Financial experts all agree that everybody should have at least 3 - 6 months wages sitting in a savings account in case of an emergency such as job loss or illness. This can be one of the hardest things to achieve. Many people just hope or wrongly assume that bad things won't happen to them.

Not only will planning for financial emergencies help you sleep at night, it will also go a long way to reigning in those spur-of-the-moment purchase decisions which you may later regret. Set up an online savings account with a high interest rate, and start an automatic savings plan so that every pay day, a portion of your pay goes into the emergency account.

This one has a two-way benefit. Not only will it save you money, but the environment will also reap the benefits of your new compact fluorescent lighting and water-saving shower heads. And instead of giving money to a charity this year, why not offset your carbon footprint? There are a number of companies now offering this service and the cost is not that high. Energy company JackGreen.com.au has just launched a new carbon offsetting service which is well worth checking out.

Credit can be a powerful thing, but only in a beneficial way if it is managed responsibly. Like a double-edged sword, using credit as your primary method of payment can literally earn you rewards. At the same time, it can also send you down the slippery path of debt. It's just too easy to spend up big with money that isn't yours, so relying on credit is a safe option only for those who possess the will-power to handle it. To those people, credit cards and personal loans are a tremendous tool to manage cash flow. If you're one of these people, research the best rewards programs, maximise your rewards and try to put everything on your card. You'll get more points that way, and the rewards will soon add up.

We all have hobbies, but what most people don't realise is that it is possible to profit from what you enjoy in your spare time. Why not turn your gardening fetish into a real money spinner by setting up a road-side stall to sell garden produce? Or take your digital photography to the next level by selling your artwork on a web site such as DeviantArt.com. There are so many ways that you can make a bit of extra money doing what you love.

Whether you're a serial resolution-maker or this is the first year you've really thought about setting some goals for 2008, now is a great time to start. Challenge yourself, and you could be surprised at what you can accomplish even if you end up breaking some of your new years resolutions.

RateCity is the best website to shop around on for all credit cards, as well as most other financial products. At RateCity, you can use expert comparative data from CANNEX, Australia's leading financial research and ratings firm. CANNEX has analysed and evaluated hundreds of financial products to award five stars to only the very best. The CANNEX star ratings go much further than just looking at interest rates. They also take into account important features so you can be confident you are getting the best product.

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