Have you resolved to get your finances in better shape for the new year? These financial fitness tips can help you reach your goals!
- Consider the 50/30/20 rule.
- This rule suggests budgeting 50% of your income for needs, 30% for wants, and 20% for savings and debt payments.
- Strive to keep your rent or mortgage payment below 30% of your income.
- Track your spending in detail for 1-3 months to get a good idea of where your money is going. Then evaluate to see if there are areas for improvement.
- Once you’ve gotten a clear idea of your spending habits, consider using a budgeting app to stay on track with your plan.
- Automate your savings so that a portion of your monthly income is immediately set aside.
- Work towards getting about 6 months of living expenses set aside in your savings. This should be separate from savings for other goals such as a large purchase or a down payment on a home.
- If you need to save more, try these tips to reduce your spending:
- Plan your meals ahead of time and build a grocery list before you shop for food. This can help prevent impulse purchases from adding up while you’re browsing the aisles at the store.
- Don’t save your shipping and billing information on online sites. This forces you to slow down and put all that information in every time you want to buy something online, which can help you make sure it’s a purchase you really want to make.
- Round up a list of your current memberships and subscriptions to make sure they’re all things you’re using enough to warrant the expense.
Credit Management Tips
- Set up automatic payments for recurring expenses so you don’t have to worry about penalties, fees, or credit impact.
- Pay your credit card balance down every month if possible.
- If you’re paying down a larger balance over time, put your efforts toward the higher-interest debt first.
Financial fitness can help you use your money more efficiently, improve your security and reduce your stress levels. We wish you the best this year as you work toward the financial goals that are right for you.