If you’re tired of living paycheck-to-paycheck and need a financial makeover, the New Year is the best time to start anew. Bad financial habits can carry from year-to-year. And unless you resolve to buckle down and make the needed improvements, you’ll never get your finances in check. Whether your problem is poor budgeting or overspending, these five simple tips can give your finances a fresh new start.
- Review your open credit card balances. If your balances are getting out of hand, use this as an opportunity to empty out your wallet and get rid of a few credit cards. Removing plastic from your wallet helps if you have a spending problem. The less credit cards in your possession, the lower the temptation to spend. Because closing credit card accounts can lower your credit score, keep the accounts open, but cut the cards you don’t need in half. Develop a plan to reduce balances quicker, such as paying more than your minimum and negotiating a lower interest rate.
- Lower housing costs. If you’re renting a home or apartment, take drastic measures and look for cheaper housing if your lease is about to expire. And if you own your home, talk to your lender about a refinancing. With mortgage rates under 4%, a lower interest rate could possibly save you hundreds each month, which frees up cash for debt elimination and personal savings.
- Trim your grocery budget. Become a savvy shopper and trim dollars off your food budget each week. Clip coupons and then shop on double coupon days for bonus savings. Sign up for discount savings cards offered by your favorite grocery stores, and learn how to love generic brands. Shop from a list and buy only what you need – and keep the kids at home. You should spend no more than 15% of your income on food each month. This includes restaurant meals.
- Review your memberships and services. Do you really need a $40 a month gym membership, or the best cable service available? Add up all your extra monthly expenses and determine where you can cut back. It’s okay to splurge, but if you’re spending hundreds each month on luxuries, prioritizing your spending can increase your personal savings.
- Review your entertainment budget. If you’re constantly running out of money, but you earn enough to meet your expenses, take a closer look at your entertainment budget. Entertainment should account for only 5% of your monthly income. In other words, if you earn $2,000 a month, you should spend no more than $100 a month on entertainment. Discover inexpensive ways to have fun – game night with friends, free concerts, museums, go to the zoo or rent movies from the library.
Adopting new money habits isn’t easy, and you shouldn’t expect your finances to improve overnight. But with effort and a solid financial plan, you can start the New Year off on the right foot.
Post by Amanda