A new year brings new opportunities. If you have been struggling with mounting debt, job or income loss, or poor credit, then 2020 is the time to right your finances. Taking small, but consistent steps, can yield large improvements regardless of how much you are struggling financially. Here’s a quick look at five things you can do to improve your finances with some smart money management tips for the new year.
Make a Detailed Budget
Credit counselors say the more detailed your budget, the better. That means including everything you spend, earn, find, own or otherwise have possession of. You can find templates online, and plenty of useful budgeting apps that make it easier to create and track. Having visibility of your finances and a tangible financial goal is half the battle when managing your finances.
Build an Emergency Fund
Arguably, this is step number one. Create an emergency fund by starting out slowly and contributing a small amount to it every week. Consider eliminating a few things from your life to make building the fund easier. You need not live like a monk, but think about staying away from convenience stores, forgoing the specialty coffee drinks and bypassing fast-food joints. Bring a lunch to work, make a pot of coffee at home and pour into a thermos before you leave, and just stop making impulse purchases entirely.
Refinance Student Loans
If you’ve made the decision to enhance your education with a student loan, although the repayments do not occur until after graduation, those still inflated payments with high interest rates can cause your budget to quickly go out of whack. Consider refinancing your student loans. This can be a smart and viable option for any consumer who is struggling to make ends meet. With lower interest rates and longer repayment terms, it can be a quick and painless option for freeing up extra liquidity.
Analyze Your Expenses
Experts say that the one area where people have the most trouble with budgeting is related to expenses. Sit down and make a list of every place that your monthly dollars go. Include the obvious things like gasoline, rent, groceries, utilities and clothing. Don’t forget about all the leaks in your financial boat, like dollars spent on entertainment, fast food, gifts, impulse buying of gadgets, alcohol, tobacco products and more. One way to get a good fix on what you spend is to keep every receipt from every purchase you make for an entire month. Most people are shocked when they see all the small spending that adds up to a large piece of their outflow.
Save 10 Percent of All Income
A time-tested and proven way to financial security is to save 10 percent of all income. That means what you earn from a job, stock market gains, things sold online, gifts and all money the enters your possession. Starting on this habit early in life is one of the most assured ways to funding a retirement account, nest egg, emergency fund and anything else you need in your life.