The day is done. When you put your head on your pillow, do you worry about paying your bills? This year, make a commitment to have more money in your savings account so you can handle your monthly expenses and any unexpected situations. Life is full of surprises. Whether it’s a new child, a first time house purchase, or retirement, having a healthy cushion will give you the peace of mind you need to sleep well. Follow these New Year’s financial resolutions to take control of your money and live well.
1. Make a Budget
Make a budget to be sure there’s more money coming in than going out. Record all of your expenses and income to guarantee there are sufficient funds to cover your costs. If not, it’s time to take big steps to bring your lifestyle in line with your paycheck and to set financial goals.
2. Cut Your Expenses
The more money you keep, the more you can save. So, carefully analyze all of your expenses and separate them into two categories—essential and non-essential expenses. Utilities, rent, mortgage, groceries, and insurance are examples of essential expenses. Gym memberships, magazine subscriptions, take-out meals, and premium packages on your cable plan are examples of non-essential expenses. Decide that saving is more important and eliminate as many of the non-essential expenses as possible. Also, get competitive quotes on your car and house insurance and shop around to find less expensive cable and utility providers. A little bit of leg work can help you keep more of your paycheck in your pocket.
3. Leave the Debit Card in your Drawer
Spending with your debit card is just too easy and convenient. Avoid the trap of using it too freely by leaving it at home in your drawer and using only cash for your day-to-day purchases. Each week, give yourself a set amount of “pocket dollars” and don’t take more.
4. Save from Each Paycheck
Even if it’s just $30 a month, save regularly. Try to set aside at least 6% of your paycheck. Having a fixed amount automatically deposited into your account each month will help keep you disciplined and focused on your financial goals.
5. Pay-Off Your Debts
It’s difficult to save if your bills include large interest payments. List all of your non-essential debts including credit cards, membership dues, and personal loans and prioritize them. Then, set up a debt payment plan to get started. Use a credit card only in emergencies, and before you purchase anything, ask yourself this simple question: Is this a want or a need? If it’s not a necessity, don’t purchase it and reward yourself by something you enjoy that doesn’t cost money.
6. Prepare for Emergencies
Unexpected life changes happen. Be prepared for sudden challenges by having enough money saved to pay for six months of your bills. Have these funds readily available in a money market account in case you need them immediately. Be sure to only use this safety net for true catastrophic events such as a job loss or medicals costs.
7. Plan for Major Life Events
Paying for a wedding, purchasing a new home, having a baby, and putting a child through college are just a few major life events that require a substantial amount of money. Financially planning for these milestones will give you the funds needed without incurring debt or at least reduce the amount you need to borrow.
8. Enjoy Peace of Mind
By building a healthy savings account, you will be protecting yourself from unexpected expenses and your life will be less worrisome. Make saving more money a New Year’s financial resolution and by this time next year, you’ll be in better position. Now, that’s a goal well worth aiming for. Good luck!