Effective money management is a crucial goal for many people, as they work to stretch their dollar and strive to achieve financial freedom. The journey may be difficult, especially at a time when the cost of living continues to increase. But small steps can help you plan your finances better and empower you to reach your goals. Here are a few tips to help make your money go further and to get your finances under control this year:
Start Budgeting
Maybe you earned a nice income in 2022, but you wrapped up the year without really knowing where your money went. In that case, it may be time to begin tracking your spending and using a monthly budget that determines where your money goes each month.
Not only is budgeting the most effective way to understand how to stretch your money further, but it allows you to understand what you have coming in and going out. This helps you find areas where you can immediately reduce expenses.
If you don’t know where to start, you should know that there are many different budgeting tactics available. While you can always try a simple pen and paper budget, you can also look into free budgeting software like Mint or paid budgeting software like YNAB.com (You Need a Budget).
Automate Your Savings
If you had trouble saving and investing as much as you wanted in 2022, the new year is a good time to change that for good. Paying yourself first is often the best solution to this problem.
Ultimately, this means putting money into savings or investment accounts first versus waiting until the end of the month and seeing what you have left.
You’ll want to make the process automatic by setting up regular transfers to your savings and investment accounts on whatever days of the month make the most sense.
Making saving and investing automatic and not something you need to decide on every month will go a long way to getting you on track to build lasting wealth.
Take Steps to Improve Your Credit
If you have had a few credit mishaps over the last few years and your credit score is not as good as it should be, the new year is a good time to turn things around. After all, having good credit can mean paying lower interest rates and fewer fees any time you borrow money, and it can help you qualify for lower car insurance premiums, too.
You can focus on credit by using tools such as a credit-builder loan. Another option is a secured credit card that lets you build credit through responsible use. You can also build credit with bills you already pay, such as your rent payment and streaming services.
Find Ways to Lower Your Bills
The new year is the perfect time to reduce how much you’re paying on some of your bills. You may even be able to cut some bills completely, including monthly subscriptions you’ve been paying for but no longer use.
There are also some bills you don’t normally think about that you can price shop and potentially reduce. For example, many people think about their cell phone plan and subscriptions, but property and casualty insurance is an often overlooked place to start.
In other words, you should look for bills to cut but also try to reduce premiums and monthly charges for regular expenses you plan to keep.
