The pandemic has caused many people to use a larger portion of their income for essential items. Many have also found that those monthly credit card bills – and others – is more stressful than it once was. With that in mind, why not consider making some New Year’s resolutions to change the way you manage your money? Some of the following tips may help you get better control.
Budget Your Money
Although you may not like the word “budget,” it still is one of the best ways to get better money management. It will help you to know where your money is going and it enables you to see how much money you have to spend. As long as you keep a record of your purchases and know how much of the budget you have already spent, you will know how much you have left for the month the next time you go to the grocery store and anywhere else.
Reduce Your Debt
If you have balances on your credit cards each month, or other bills, you are losing money in the form of interest. The interest alone will help to keep you in debt for years. Start putting more money toward eliminating your debt and stop charging anything new to your credit cards.
One way to eliminate debt is to start paying down your smallest bill first. Then, when you pay off that bill, put the same amount of money toward the next bill, etc.
Cut Extra Expenditures
Look for other expenses that you can eliminate to get more money to pay down your debt even faster. You can also make New Year’s resolutions to eat less often at restaurants, stop buying specialty coffees, get rid of unused memberships, and you may also try to get cheaper car insurance or cable TV.
One way to find some of these unnecessary purchases would be to highlight the purchases that you made on your credit card bill that occurred on the spur of the moment but that you could have done without. You can also get your credit card, bank statements, and other bills online – go paperless – which will let you save another $10 or more per month.
Create an Emergency Fund
You also should start saving money for emergencies. They can occur in many forms but all of them are unexpected. If hospitalization is needed, it could easily put you in deeper debt. Having the money in a savings account will make the money within easy reach when needed. You should aim for at least six months worth of expenditures as a start and work toward having one year’s worth.
Buy with Cash
To avoid using credit cards and losing more money to interest, start making your purchases with cash. Planning your purchases will help prevent using those credit cards – which you should leave at home. When you need to make a larger purchase, compare prices, and wait for the item to go on sale. Some apps can help you find the best deals.
Invest Some Money
After you have reduced your debt and have an emergency fund, it is time to start saving some money. You can make short- and long-range plans, such as vacations, a boat, college, etc. Some money also needs to go toward retirement. One of the best ways to do this is to buy into an employer’s 401(k). If the employer matches the funds you contribute, this is free money and will be one of the fastest ways you can build a retirement account.
What are your New Year’s resolutions? Reply using the comments below.