The days are passing quickly, and before you know it, you’ll be saying, “Happy New Year!” As you begin a new year, you may select resolutions with the intent of making positive life changes. Finance and money matters are often at the forefront of your self-development ‘fix it’ effort. This year should be no different. So, let look at a few ways you can improve your economic standing by being smarter with your money in the coming year.
1.) Evaluate your income and expenses
Make the effort to assess your earnings and your expenses. Know your income and know all your costs even better.
Don’t estimate or guess the amount you have to handle your monthly obligations and plan for the future.
Define a detailed plan or budget to manage your finances to ensure you are not overspending, and you know what you can and can’t afford.
2.) Set Target Financial Goals
After carefully reviewing your income and expenses, you should determine a few areas of your financial life that you could improve. You may want to increase savings, build an emergency fund, reduce liabilities, or make a large purchase (e.g., house or car).
Whatever you choose, be specific and realistic based on your current financial situation (not what you want it to be). To ensure your plan is successful, create some oversight of or accountability using trusted friends or a professional financial advisor to guide your money management plan.
3.) Automate Savings
If you are not already doing so, automate your savings plan. Have funds deducted from your paycheck or account and directly deposited into the account(s) you create to hold the funds that you are targeting to increase savings, build your emergency fund, or use for a significant purchase.
Having the money placed in the accounts without any personal intervention increases the likelihood of it remaining there until you meet the threshold and timeline you defined and are ready to make use of it according to your plans.
4.) Remove yourself from notification regarding shopping and sales
The emails you sometimes receive about exclusive deals and one of a kind items are tempting. It’s easy to get so excited about an offer that you go off course and make an unplanned purchase because the offer seemed too good to pass up.
You use funds that were earmarked for savings because the ads are convincing, and you believe you can catch-up on your savings over time. But, these offers never stop coming so it’s best to cut them off by canceling your subscription to the notices and reduce the possibility of veering off course due to a tantalizing deal.
5.) Live Below Your Means
Having assessed your income level and your needs, you know your financial strength. Well, one method you can use to increase that strength level is to define your standard of living using a sum that is less than your current income.
For instance, if your evaluation revealed that you could afford a car payment of $500.00 per month, set your standard for a car payment to $300.00 per month. Take the excess and set it for direct deposit into one of the savings buckets you created, and you will be well on your way to building a nest egg. Then you will have funds set aside for future use and to cover unexpected bills.
6.) Pay Bills On Time
Building an excellent credit history is as essential as building a nest egg. Therefore, paying your obligation on or before the due dates, avoiding late payments and late fees weigh heavily in your credit rating and credit score.
7.) Pay off/Reduce Credit Card/Loan Levels
The number and amount of credit obligation that you have also impact your credit score and history. Lowering the amount of credit you use or the loans you have will drive a positive credit score and history.
Pay more than the minimum due to reduce your liability level and pay off the balance as soon as possible. In fact (if possible), aim to use only the amount of credit that you can pay off in the same month.
8.) Cutback your use of credit cards
Keep the balance you owe on your credit cards as low as possible. Make sure your purchases are necessary, especially if you can’t pay it off on your next due date.
9.) Focus on Retirement
If you are old enough to work, you are old enough to begin defining a retirement savings plan. In addition to savings and creating an emergency fund, you should set up or start contributing to a retirement savings fund.
If your employer offers a retirement fund with matching contributions, be sure to participate and fund your account with at least the amount or percentage that they match.
10.) Get Financial Training/Education
Staying abreast of the latest trends, investments, or finance building skills is a must to ensure you are managing your money well and setting up a strong portfolio to maintain economic stability.
You should invest in financial literacy by reading, attending seminars, and participating in training in the areas of personal finance, budgeting, investment, and retirement to ensure you have the tools needed to manage your money in the best possible manner.
Protect Your Money and Your Future
You work hard for your paycheck. You have needs and requirements to live as you wish. Your earnings define your standard of living now and even in retirement.
So, protect your earnings and your future by taking a stand now to be smarter with your money.