The start of the New Year comes with new goals and some exciting changes. We think that you can make smart resolutions that you will be able to fulfill through this year, with a bit of planning. Your financial goals are within reach and we’re here to help you crush your financial new year’s resolutions.
Get a Full Understanding of your Finances
Print your bank statements collect your monthly checks, do whatever you need to in order to get a full picture of your finances. Some vital information you’ll want to know is your monthly income after taxes and how much of that is going towards living expenses. Those can be rent, utilities, loan payments, and more. These are expenses that are long-term and can’t be changed.
From here, you can see where the rest of your income is going. Sometimes, the fact is that your income is just barely above what you’re paying each month just on living expenses. If that’s the case, think hard about things like deferment for loans, ways to lower rent expenses, or committing to finding a higher paying job.
Before you can make any inferences, you need to know where your money is going. Take your time when going through your finances and try to really get an in-depth look at where you’re spending.
Experiment with Cutting Back
Now that you know where you’re spending, experiment with cutting back. One of the biggest luxuries that the average American spends their money on is going out to eat. This would be the first place we’d suggest cutting back.
Start small so you don’t get overwhelmed. If you tend to go out for dinner four times a week, cut back to only eating out on the weekend. Find small ways to keep your money on your mind, even if that’s just passing on a drink with dinner. By starting small, you’ll slowly get more used to staying within a budget.
Commit to Checking Your Spending
Some find it easier to create a weekly budget – it’s more frequent and will give you a closer look at your finances. This budget can be adjusted at the end of each week to account for things like rent and bills.
If you know that you have bills coming out this week, add that to your weekly budget. Then, at the end of the month, you can add up your expenses to compare it with your monthly income.
If you’re still finding it hard to stay on track, commit to checking you’re spending at the end of each day. Try out different ways to check on your money and stick with whatever works for you. Everyone will be different, it’s up to you to commit to your finances and do what works.
Use Cash for the First Few Months
Until you get used to your budget, we recommend using cash for things like groceries and other expenses that can go unchecked. You should have a good idea of what you spend on groceries each month at this point. Instead of charging your groceries to credit or a debit card, bring cash with you to the grocery store and don’t spend a penny more. Looking through ads and planning your grocery list will help tremendously with staying within budget.
Use cash for all other expenses as well, like social events, coffee, and shopping. By using cash, you’re giving yourself a tangible budget. When the cash is gone, you’ve reached your maximum spending allotment. This is a great way to police yourself if you’re notorious for overspending on nights out.
Prioritize Debt and Savings
If you’ve read any of our blogs you’ll know that our motto is: save first, spend later. Easier said than done, right? We know how hard it is to save, that’s why it should always come first. With one exception: debt.
Your first priority when it comes to your finances should be to pay down your debt. The first and most important of which is credit card debt. This is because credit cards typically have the highest interest rates and can wreak havoc on your credit score.
Add up all of your debt and prioritize your payments by the highest interest rate. Start by paying off the minimum balance due each month until you can realistically pay more. When getting back on track financially, it’s always important to be realistic and start slow. Nothing good comes of getting overwhelmed.
Create Your Budget
Your budget should be the last thing you create. By experimenting with all these things before creating a budget, you’ll know what will work best for you. Take your time when planning, spending, and delving into your finances.
The budget you create should have limits on spending and monthly savings goals. If you’ve found that using a weekly budget works best for you, run with it! Be sure to check on your progress at the end of every week until you get the hang of it, then you can start using monthly budgets.
Everyone starts at different points, know where your finances are and don’t try to cut corners to get ahead. You have a whole year to get your money back in shape, take your time and don’t forget to make smart goals! If you run into any issues, we are always here to help!