A brand new year has begun, and it’s the perfect opportunity to reassess your financial situation and see if there are any adjustments to be made. Taking some time to review your spending and saving habits is a great way to give your budget a check up and make changes if necessary. Whether you’ve overspent through the holidays or have splurged on a big vacation for this year, it’s a good idea to revisit your balance sheet to see where you stand. You’ll be surprised at how small changes can make a big difference!
Review your budget
The first step towards making positive financial change is to do a complete review of your finances. Take stock of all of your expenditures each month – no matter how big or small. Make sure to include a category for miscellaneous items like your morning latte or your afternoon smoothie. Once you have tallied all of your line items, see where you stand in relation to your income. Are you meeting your needs? Could you be saving more? Are there areas in which you could improve? Set goals based on your data and make a plan to act on them.
Assess your debt
If you have a lot of debt, make sure you are able to manage your monthly payments and keep your credit score intact. Making interest only payments is a no win situation that can have you paying much more than you originally borrowed, without paying down your principal. Consider making changes in your daily spending habits to free some cash for debt reduction. A little belt tightening now can help you out in the long run. Lower credit payments and a better credit score will be your best reward.
Plan for a rainy day
Once you have your debt under control and a healthy budget in place, it’s important to establish an emergency slush fund. This “rainy day” money can help ease the pinch of unexpected expenses such as a new roof or car repairs. Setting up automatic transfers to your savings account is a great way to accomplish this goal, and before long, you won’t even notice the money is gone from your account. Another suggestion for those who are fortunate enough to have annual pay increases is to simply allot the difference to a savings account earmarked for urgent needs. You truly won’t notice the great contribution you are making to your own financial security.
Of course, if you find it challenging or overwhelming to go through your finances on your own, the professionals at D. Thode & Associates would be happy to help you prepare a personalized budget that is realistic and geared towards reaching your goals.