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Sometimes just the thought of personal finances can raise someone’s anxiety. Budgets? Emergency funds? Credit reports?
It can all seem incredibly overwhelming.
But with a little bit of work upfront, you can organize your finances like a pro. My tips below will help get you started.
Implement the financial resolutions below to make this the year that you put your financial house in order and change your financial life for the better.
1. Create a budget
The first step in putting your financial house in order is to create a budget. A budget will help you understand the full picture of the cash you have coming in and the cash you have going out. And hopefully, it’ll help you have much more cash coming in than going out!
Check out this post for easy-to-follow steps on creating a budget.
2. Track your spending
The most perfect budget in the world won’t be much help if you’re not also tracking your spending. By tracking your spending, you have a better idea of your spending habits and can identify ways to cut back or adjust your budget.
Tracking your spending also helps you to catch errors or even fraudulent activity in your account faster so that you can take action to correct it.
Read this article for a tutorial on how to track your spending.
3. Pay off debt
Make this the year that you finally pay off the last of that student loan debt. Or the year that you declare yourself free of credit card debt.
By creating a budget and tracking your spending, you can find ways to set aside a little extra every month to pay down debt.
Paying off debt gives you an incredible sense of satisfaction and financial freedom.
4. Pay your bills on time
Late fees are a real bummer. Especially when they can be avoided.
Try setting a monthly calendar reminder to remind you to pay your bills.
On the 28th of every month, I have a calendar reminder to pay all of my bills for the next month. I use that time to pay my bills, plan my budget for the next month, and check-in on my account balances. I look forward to these sessions each month as a monthly affirmation to keep my financial resolutions going all year long.
5. Create an emergency fund
When you create your budget, allow room in your budget to create an emergency fund.
This emergency fund is truly just for emergency situations. This might include surprise car repairs or unexpected medical fees.
To create your emergency fund, set aside a little each month to build it up.
Recommendations vary on how much you need to have in your emergency fund. I like to have six months of required costs. These are the costs that I absolutely have to pay. For me, this includes my mortgage, car payment, and utilities.
6. Create a splurge fund
Just because you’re budgeting, doesn’t mean that you can’t splurge sometimes!
But rather than just buying on impulse and blowing your budget, make a plan to splurge on occasion.
Create a splurge fund, which is similar to an emergency fund, but this time the funds are available for fun purchases to treat yourself or your family.
You’ll create a splurge fund like you would an emergency fund, by setting aside a little bit each month to grow it over time.
Read this post for tips on how to splurge without blowing your budget.
7. Get a copy of your credit report
I’ve heard people say that they don’t want to see what’s on their credit report, and for that reason, never look at it.
But just because you don’t look at it, doesn’t mean that it ceases to exist. All the potential issues that may affect your credit are still there – whether you want to address them or not.
So why not make this the year that you address them?
You’re allowed one free credit report every year from each of the three credit agencies (Equifax, Experian, and TransUnion). Request a credit report from each of the agencies by going to this website. The credit reports include instructions on how to contact the credit agency if you identify a concern.
8. Reduce your banking fees
Do any of your bank cards, credit cards, savings accounts, or checking accounts have
If yes, contact your bank or credit card company to see if you can eliminate or reduce the fee.
In the past, I’ve had two different banks charge me monthly fees for checking accounts. I contacted each of them to ask how I could eliminate or reduce the fee. One bank completely waived the fee and the other bank transferred my account to a different checking account type, which resulted in eliminating the fee.
Give your bank or credit card company a call today – it never hurts to ask!
9. Find a financial accountability buddy
We have accountability buddies for healthy eating and exercise, but what about for our finances?
This year, make it a goal to find a financial accountability buddy.
Share your financial goals with your buddy so that they can keep you accountable to them.
I shared with a friend that I wanted to cut costs. One day when we were out to lunch, I suggested that we go into a nearby store. My friend reminded me about my financial goals, which stopped me from walking into the store and making a purchase that I would regret.
10. Create an “in case of emergency” financial folder
If something were to happen to you, and a loved one needed to access your financial information, would they be able to do so easily?
Alternatively, if you suddenly had to evacuate your house for a fire, earthquake, hurricane, or other disaster, would you be able to access your financial information easily?
If the answer is “no” or even “maybe” to either question, it’s time to create an “in case of emergency” financial folder.
Many of us keep information about our financial accounts, passwords, and other important information in multiple locations, where it’d be difficult to locate or gather in an emergency.
This year, take time to organize a list of all your financial accounts, passwords, and other important financial information together.
Depending on your level of comfort, you may want to store the information electronically in a secure location, so you can access it remotely, in case you were unable to physically reach your home.
Whether you store the information electronically or in a secure physical location, make sure a loved one or trusted friend knows where to find that information in case of emergency.
11. Cut down on expenses
As my salary increased over the years, I noticed that my spending also increased. I never lived outside of my means. But as my means increased, so did my costs. This “lifestyle creep” meant that I was making more money, but I wasn’t saving more money.
My financial resolution this year is to focus on cutting down expenses. This means I’ll be able to set aside more in my emergency fund or splurge fund, focus on giving more
I’m going to start by swapping some expensive dinners with more homemade meals, finally cutting the cord with cable, and taking advantage of my library card for books and movies instead of purchasing them.
What ideas do you have for cutting costs this year?
12. Increase your financial literacy
Are there certain financial concepts that have always seemed too big and strange to try to learn them? Maybe something like a 401k, a Roth IRA, or a hedge fund?
Pick just one financial concept that’s unfamiliar to you and make this the year that you finally learn more about that concept.
Check out a library book about it, listen to a podcast about the subject, or read a blog post about it. After figuring out your one financial concept, you may find that you’re hooked – and can’t wait to learn more about other financial concepts.
I hope these financial resolutions help you to get your financial house in order, help you to reach your financial goals, and change your financial life for the better.