New Year's Resolution: 5 Tips To Get Your Finances In Order
Now that the holiday spending season has come to an end, it’s time once again to make your New Year’s resolution to save more money in the new year! We know getting started on that plan can be difficult, so here are five easy tips to get your finances in order in the new year!
Identify your spending habits
A great place to start is to figure out where your hard-earned cash is going each month. Review your financial statements and see if you can identify any trends. If you notice that most of your money is being spent in one category, such as shopping or eating out, set yourself a limit on how much you can spend in that category each month.
Create a budget and stick to it
A smart step in creating your budget is to be realistic. Don’t make drastic cuts that aren’t realistic for your lifestyle and will be difficult to maintain. It’s okay to start small to make sure you stick with your plan in the long run. Start out by calculating how much money you have left after all your bills are paid each month. To do this, simply take your monthly income, deduct your set bills, estimate the bills that change each month (such as your electric bill), and see how much spending money you have left over. This will help you stay away from spending more than you’re bringing in each month.
Some even choose to use the “Envelope Method” where you take out a set amount of cash each month for specific spending categories and stick to those limits by only using the cash in the envelope.
Reduce your debt
Debt consolidation can offer you some serious relief. Not only will it put all your bills into one monthly payment, but it could also help reduce those high-interest rates you are paying and get you out of debt faster. There’s nothing more frustrating than knowing most of your monthly payments are just paying off the interest you’re accruing. Consider a zero percent interest credit card to transfer all your debt into one place for a single monthly payment without all that pesky interest. This option would give you the breathing room you need to get your principal paid off this year.
LEARN MORE: Take control of your credit card debt by transferring your balance to an Honor card with 0% interest for 12 months. Click to learn more.
Start building your savings
Once you’ve figured out how much money you have after your bills are paid each month, it’s time to decide how much to put in your savings account. Again, it’s okay to start small and just transfer what you’re comfortable with each month. If you put away only $25 out of each biweekly paycheck, you’ll save $650 in a year! Choose an amount that works for you and slowly increase the amount you put in as the months go on. You’ll be surprised by the end of the year how much you can save! Consider depositing that cash into a CD (Certificate of Deposit) to earn more interest than a typical savings account.
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Have an emergency fund
t seems like when you’re trying to save money there is always something that comes in the way; a sudden car repair, emergency dental work, or a broken washing machine. Having an emergency savings fund will give you a backup plan when something comes up and will allow you to stay on track.
It’s important to keep the emergency fund in a place where you can get to it easily and quickly. Whether you keep it in a checking account or money market account with a debit card, the key is to have an accessible safety net between you and life’s unexpected expenses. How much you will need in your emergency fund is dependent upon your situation, but most financial experts agree that a good fund will cover 3-6 months of expenses. Start building up your emergency fund today – every dollar counts!
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