The first few months of the year is the perfect time to take control of your personal finances. If you have decided that this will be the year you listen to sound financial advice and begin saving money for the future, the following money tips are designed to help you.
From taking a good look at your monthly expenses and paring down your cost of living to setting up automatic savings, here are five of the best (and easiest) ways to take control of your finances and start looking toward the future.
Evaluate your monthly expenses.
Take the time to write down all of your monthly bills and then look at ways to reduce them. For example, if you are paying an extreme amount for cable each month, consider switching to a cheaper package or getting rid of it altogether and opting for a more cost effective alternative, such as Netflix, Hulu, or Amazon Prime.
To cut down on your monthly energy costs, lower the hot water temperature to 130 degrees Fahrenheit, switch to energy-efficient light bulbs, install a programmable thermostat and/ or routinely replace your air filters to improve efficiency. To reduce your monthly water bill, take 5 minute showers, switch to a low-flow shower head, fix leaking sinks or toilets immediately, and turn off the water when brushing and shaving.
Cut down on your frivolous expenditures.
If you pick up a morning latte several times a week, cut it out entirely or allow yourself just one a week. If you are constantly eating out, learn to cook. If you are paying for a gym membership that you rarely use, let it go and head outside for some exercise in the fresh air. If you are in the habit of frequently swiping your debit or credit card for little things, leave your card at home and use cash instead. Withdraw a certain amount of money at the beginning of the week and use it for all your small purchases. Once you run out, you’ll have to wait until next week.
Automatically make deposits to a savings account.
If you don’t quite have the self-discipline needed to set aside a percentage of your paycheck each month for savings, look into having this done automatically. You can set aside money in a savings account or contribute to your 401K. You can ask your HR department if they are able to do this or talk with your bank. Many banks will now transfer a set amount from your checking to your savings account each month at no charge.
Look into your options when choosing a savings account.
While you obviously want to look at interest rates, you should also consider any minimum balance requirements or fees, such as a standard monthly service charge or ATM fees, which may affect your ability to save.
Pay off your credit cards.
Credit cards can easily become a bad financial habit. If you are one of the millions of people who owe a credit card company, it is time to pay off your debt. If you have multiple cards, tackle the one with the highest budget first by paying more than the minimum balance each month. On the others, continue to pay the minimum balance.
It is also a good idea to look into zero-interest balance transfers that could potentially save you hundreds of dollars. The important thing to remember about these offers is that they are really only helpful if you pay off the debt before the balance transfer expires. At the same time, put your credit card away. If you continue to charge it, you’ll never get your balance down to $0.
If you will be receiving an income tax refund or other bonus, apply it (or at least a portion of it) to paying off your debt.
No matter what state your personal finances are in, it’s never too late to turn things around. Start with these five simple steps and you’ll be on your way towards a healthier financial lifestyle.