Money can be one of the most stressful components of life. Revamping your finances can be a difficult journey, and many people become overwhelmed when they try and make changes. In fact, 32% of people surveyed said they would like to save more and spend less in 2019 - a new year’s resolution which is easier said than done. Below you’ll find a few tips to get your finances in order this year.
Create A Budget
Creating a budget is the first essential step to staying on top of your finances. Knowing where your money is going, and forming on a monthly budget can save you from a lot of anxiety. It’s important to stay realistic with the amount of money you should be spending. According to Teachers Insurance and Annuity Association of America, 20% of your income should go to your savings, while 50% should go towards necessities. The final 30% can go toward whatever you want. Following this format should help you track how much of your income goes toward each expense.
Earn More, Save More
Just because you earn a raise, receive a big tax return, or find a new high-paying job does not mean you should spend all this extra income on desires. It’s common to start thinking about your next big purchase with all this new hard-earned money, but if you’re earning more, you should be saving more. We recommend putting the money your 2018 tax return or a portion of the raise from your new promotion into your savings.
Avoid Expensive Habits
There are a few common offenses among individuals with poor spending habits. One of the major culprits of overspending is eating out. Practice shopping for an appropriate amount of groceries for the week, and prioritize foods that go bad quickly. Another financial downfall is shopping at expensive clothing stores; trying to keep up with all the new trends can be harmful to your finances. Cut down on your shopping, and do your best to find cheap alternatives to luxury brands.
Know Your Credit Score
One of the most important aspects to maintaining good financial health is knowing your credit score. A good credit score is crucial when it comes to making large purchases, and even landing a high-level job. To increase your credit score, you can reduce the amount of debt you ow, pay your bills on time, and only open new credit accounts as needed.
Think About Your Goals
We recommend laying out goals to help you stay on track with your finances. Determine where you would like to be financially and what you plan on purchasing in the future. Whether you’re thinking about buying a new home or car, preparing for future purchases is key. This most important thing you can do is continue to grow your savings account. If you’re struggling to establish your financial goals, consider meeting with a financial advisor.
Pay Off Debt
Debt is often the main thing holding us back from our financial aspirations. Paying off any form of debt you may have should be a priority. Not only does it prevent you from saving, but it also has a direct impact on your credit score. Staying on top of monthly payments for loans, credit cards, and other sources of debt will provide you with an understanding of the constraints of your budget, while also putting you in a better position, financially, in the future.
