January 22, 2021
How to Organize Your Finances in the New Year
Here’s some advice on how to change old financial habits
Now that we are well into the new year, it is a good time to make commitments to change the way we live for the better. It’s the time to set realistic goals and make financial plans for the future. Here are some suggestions on how to keep your finances organized in the new year.
Set a budget
Review how your spending has changed over the past year. Make sure you are not living above your means. It is important to set a monthly budget so that you are aware of what you spend in relation to your income. The more realistic and attainable your budget is, the more likely you’ll be to stick with it. Include monthly costs like housing, utility bills, groceries, and subscriptions. Don’t forget to allot some of your budget for dining, entertainment, and shopping. There are a lot of mobile apps out there that can help with setting a budget and tracking your monthly spending.
Get out of debt
If you are carrying debt, now is the time to pay it off and start off the new year with a clean slate. Interest from credit cards and other debt can be taking a lot of money from you over time. Set up a debt repayment plan, get a temporary second job, or declutter your space and sell items to make some extra cash. Once you are debt free, you will have more financial freedom and more peace of mind.
Set up an emergency savings account
If we learned anything in the last year, we found that it is important to have money put aside for unexpected situations. If you spent your emergency savings or acquired debt due to the pandemic, now is the time to put money aside in an emergency savings account. Put a portion of your income into the emergency fund every paycheck. It’s a good idea to have enough saved to cover 3-6 months of living expenses. A financial cushion like this can help you weather the unexpected in the future.
Start investing
Whether it is starting an investment portfolio or opening an IRA, you can grow your money at a quicker rate while planning for your financial future. With some research, it is easy to start investing on your own or you can talk to a financial planner who can give suggestions and develop strategies to help you achieve your investment goals.
Use the new year as a starting point for your financial plan. If you have questions or need help, make an appointment with a financial advisor today to help you make good financial decisions.
