How many New Year’s Resolutions did you make this year? How many of those resolutions have already been broken? When it comes to your money, anytime is a good time to change your habits and become more budget-aware. Here are seven personal finance basics most people can follow.
- Set reachable goals. Many people rely heavily on credit cards, especially when it comes to holiday shopping. To start off the New Year on a good financial foot, try to get your credit card debt down to less than $500 or paid in full every month to avoid interest fees and charges. If you have multiple cards, pay off the one with the smallest balance first as it’s a task that won’t seem insurmountable and it’ll give you a sense of accomplishment once you’ve reached that goal. Continue this routine until your credit card debt free. Creating an emergency fund by saving any $5 bill you come across each month or reducing your spending by 10 percent are other worthy goals that will benefit your wallet.
- Spend less, save more. Don’t spend more than you make! It sounds simple, but this is a common mistake many consumers fall into. If you live within your means, it’s much easier to avoid the pitfalls of credit card debt. Creating a monthly budget and tracking your spending will go a long way in curbing your urge to spend more than you earn.
- Check your bank account statement often. Identity theft is a major issue in the 21st century, and closely monitoring your bank account will help you spot fraudulent charges quicker, potentially stopping you from incurring further losses. Keeping an eye on your accounts is also a good way to monitor your spending and identify expenses that can be reduced or eliminated.
- Reduce your utility bills. There are numerous eco-friendly ways to conserve energy, water and other natural resources. Start by turning the thermostat down to 68 degrees in the winter and wear a sweater or sweatshirt to keep warm. Conversely, keep your air conditioning set at 78 degrees in the warmer months, and set it higher when you know you’ll be away for an extended time. Install low-flow shower heads and toilets to lower your water bill, and look for high-efficiency LED lights to save on your electricity bill. These may seem like small changes, but the savings will add up quickly!
- Be a smart shopper. The internet makes it very easy to shop around for the best price on an item, so plan ahead and look for the biggest savings. Be willing to wait until products go on sale – holidays like Memorial Day, 4th of July and newer events like Black Friday and Cyber Monday are prime times for deals.
- Dine in more often. Instead of spending money at a restaurant, prepare meals at home. This will help you pad your bank account and (hopefully) become a better cook! Related to this, brew your own coffee – you’ll see immediate savings when you skip stopping for a $5 latte or mocha on your way to work.
- Shop for less expensive insurance. Auto, home or renter’s insurance rates are very competitive. Keep your premiums down by comparing rates at least once per year. It’s easy to make an appointment with a Mercury agent to make sure you’re adequately covered, as well as getting all of the discounts for which you may qualify.
It’s never too early to teach your kids these good money habits as well – if they learn how to manage money effectively at a young age, they’re less likely to carry large amounts of debt when they’re older. When you work together as a family to save money, you may even be able to reward yourselves with something special like a weekend away or a nice vacation.