Tips to Reset your Finances for the New Year
A New Year is the perfect opportunity to reassess your financial situation and see if there are any adjustments to be made.
Have you overspent through the holidays or splurged on a big vacation for this year?
This may be a good time to review spending and saving habits and give your budget a check up. You’ll be surprised at how small changes can make a big difference!
Here are a few tips to Reset your Finances:
1. Review your budget
The first step towards making positive financial change is to do a complete review of your finances. List all your expenditures each month – no matter how big or small and be sure to Include a category for miscellaneous items like your morning latte or your afternoon smoothie. Review and add up all your items and see where you stand in relation to your income.
Are you meeting your needs?
Could you be saving more?
Is there room for improvement?
Once you review your budget, it is time to set goals based on your data and make a plan to act on them.
2. Assess your debt
Managing your monthly payments is important especially if you have a lot of debt and keeps your credit score intact. When you only pay down the interest and not the principal, you end up paying more than the original amount borrowed. By making some daily changes in spending you will have more cash to lower your credit payment and that improves your credit score.
3. Plan for a rainy day
When your debt is under control and you have a better budget in place, it’s time to grow an emergency fund for those rainy days. This takes the pressure off unexpected expenses like car breakdowns or house repairs. Automatic transfers to your savings account is a good way to start building this fund. After awhile you don’t even notice other than having enough to pay for those emergency expenses. Another way to build the fund is if you receive annual pay increases to take the difference and add it to your savings.
Plan for a Rainy Day
If you find it challenging or overwhelming to go through your finances on your own, the professionals at D. Thode & Associates would be happy to help you prepare a personalized budget that is realistic and geared towards reaching your goals.
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