Ahh yes, here we are the beginning of a new year! The time when we’re all out to make a fresh start for the year and leave old habits behind us. If one of your resolutions has been to get your finances in check, here are 5 simple ways to do just that:
1. Pay down high-interest debt. The holidays can lead to over-extending and borrowing more than you should. This is a great time to develop a strategy to pay down your debt. Start with the balances holding the highest interest and always pay more than the minimum amount due.
2. Improve your credit score. While paying down your debt, you can improve your credit score. In order to improve your score, it’s important to pay your bills on time and try to keep your level of debt under 30% of available credit.
3. Create an emergency fund. If you haven’t already done so, start building up a fund that holds 3 – 6 months of living expenses. If you need additional discipline, set up a bank account separate from your everyday checking and savings, and systematically add to the account through direct deposit out of your paycheck.
4. Increase your retirement savings. If you’ve already established an emergency fund and have the means to do so, beef up your retirement savings. Even if you only increase your savings by bumping up 1% of the amount you’re putting away or even just $25 out of every paycheck, a little can go a long way! As they say, “Every penny counts.”
5. Review your insurances. When was the last time you reviewed your homeowners or automobile insurance? Shopping around can help lower your monthly payments. Increasing your deductibles is another way to lower monthly costs. Remember, insurance is meant to cover expenses that you can’t. If you can afford a $500 or $1000 deductible, by all means, do so in order to reduce your monthly premium.