The New Year is a perfect time to look back on your life and decide what things you’d like to change and where you’d like to find improvements. It’s always difficult to make resolutions, but under the right circumstances and with the proper motivation, it can be done.
This year, why not make it a resolution to fix your personal finances and get yourself out of debt? Besides signing up for a debt consolidation program, here are five money management tips that will help you achieve your goals.
1. Understand Your Financial Situation
The first step to financial wellness begins with taking the time to sit down and figure out exactly where you are with your finances. As yourself:
- How much do you owe?
- How much do you make?
- How much do you spend?
- How much money do you have saved?
- Do you need money for retirement?
With this knowledge in hand, you can begin to make a plan.
2. Set a Realistic Budget
With the information you’ve gathered, start creating a monthly budget for yourself. There are many free online budget planning tools that you can use to do this.
With this tool plan out how much money you will spend, what you will spend on, and how much will go towards debt repayment or savings.
Take a look and see if there is anything extra you are spending on that you can cut.
3. Create an Emergency Fund
You never know when you might need money. Make some room in your budget to save 3 to 6 months’ worth of your money inside a savings account that you can easily access in case of an emergency.
Emergency funds are for rainy days, without this, you’ll have to borrow from your credit card, as it is so easy to draw money from your credit line. But these are traps and most definitely will put you in debt spiral.
If you can’t manage that, then start by putting aside $1,000 for yourself. Do that every quarter fo as long as you could do it.
Try to get a side job, if possible and save all the proceeds towards this emergency fund.
There are many ways you can earn money from your home. You can easily earn $100 a day, with a computer and internet.
4. Adopt Frugal Living Habits
Sometimes it’s necessary to cut back and live frugally to save money and get your budget to work. Here are some suggestions of what you could do:
- Stop eating out so much and eat food and make coffee at home
- Cut subscriptions like for cable or streaming services
- Shop at thrift stores or buy generic products
- Use coupons and keep an eye out for deals – consider using a couponing app
5. Work on Your Credit Score
A bad credit score means that it’ll be difficult for you to loan money from first-tier lenders like financial institutions, or that if they do it will be at extremely high rates.
In order to improve your credit score, you’ll need to start paying your bills on time consistently and avoid late payment penalties.
Also, it’s important to check your credit report (which you can do for free) and see if there are any errors that could be negatively impacting your score.
Seek Out Financial Assistance
Sometimes it’s hard to get along on your own. If you’re struggling with debt and it seems impossible to get out of it, then consider contacting a non-profit credit counseling agency for assistance.
Their certified Credit Counsellors will be able to work out a debt repayment plan with you that is realistic and achievable.