The New Year is the perfect opportunity to set intentions and start fresh by getting organized with your finances. The key is to set goals, stay motivated and stick to a guideline that will keep you in check throughout the year. Take a look at these five New Year’s Financial Tips:
Before you set any goals, you need to know where your current finances are at. Assess any savings, checking, debts or investments and take note of each of the balances. This will help you grasp an idea of what you need to pay off, how much you have in savings and how much you would like to have by the end of the year.
By looking at your credit and debit cards, you can categorize all your purchases. This will help you gain insight on where you spend your money. For example, you can use categories such as these:
After categorizing how you usually spend your money, you can see if you are overspending in any category and budget accordingly. For example, if you notice that you are eating out too often, maybe give yourself a $100 budget to eat out per month and once you hit that mark, stick to grocery shopping for the remaining weeks. If you know you want to have a certain amount saved by the end of the year, make a separate savings category and budget accordingly for your goals.
When categorizing your monthly expenditures, it’s crucial to make a category for savings. Whether you open a 401k plan with your company for retirement, or open a general savings account with your bank, it’s essential to have an emergency back up plan. Life is unpredictable and having money in the bank will give you security and peace of mind if anything goes wrong. Savings can also contribute to purchasing a house one day or starting a family.
Once you’ve assessed your current financial status and created a plan, don’t lose sight of your goals throughout the year. It’s natural that life happens sometimes, and under unique circumstances, you can’t always follow a strict guideline, but don’t let a one-time situation set you off track. While credit cards seem like just a little piece of plastic, it’s easy to lose sight of the impact overusing these can have on future debt, savings and more.
Try to be mindful of your income, debts and savings goals for the future throughout your day when making any purchases. Being financially responsible will help you to get organized and prioritize your expenditures for a successful year ahead!