The beginning of a new year is a great time to make financial changes we have long delayed or avoided. here are 21 ideas that may help you manage your hard-earned money better:
- Take the time to review every penny you make and spend. Make a paper list or an Excel spreadsheet.
- Examine every expenditure; was each purchase essential? Consider your “why” on each purchase. Does the way you spend your money align with what you value?
- Based on the review you just complete, develop a budget. make it your goal to build your budget based on 80% of your net income. This allows you room to save and make charitable donations.
- Start a savings account and have money directly drafted from your checking account into your savings. Use this as an emergency fund, not extra money for everyday expenditures.
- Include a plan to save at least a small amount each payday.
- If you are unable to make a budget on your own, seek assistance. Be sure the person you approach for help is good with their finances.
- Don’t base your spending on someone else’s financial situation. Don’t compare yourself to others and expect to have all the “things” your parents or others have.
- To prevent impulse buying, implement the 24-hour rule. Wait 24 hours before making a purchase on non-essential items.
- Discontinue duplicate services like Netflix and Hulu. Do you really need every channel cable TV has to offer?
- Don’t shop out of boredom. Avoid going to the store or browsing Amazon or other shopping sites for entertainment.
- Pay your bills on time. Late fees add up quickly.
- Check with your bank to see if there’s a checking account without monthly fees.
- Review all your insurance policies with your agent; home, auto, umbrella, health and life. You will be surprised by the savings you can realize with simple changes.
- Review the income tax deducted from your paycheck. If you expect a large refund every year, you are having too much money withheld. When you received a large tax refund, it means the government has held your money for a year with no interest earned. Use this money for your savings.
- Automate bill paying; set things up to directly draft from your checking account.
- Meal plan before you grocery shop; buy based on your grocery list. Plan for leftovers so you can take your lunch and avoid the cost of eating out.
- Cell phone plans change often, so ask your carrier if they have another plan that may cost you less. Check with other carriers for a better deal.
- If you have credit card debt, call your credit card company and ask for a lower interest rate. If you pay your bill on time, they often will lower your rate.
- Stop or cut back on alcohol or tobacco consumption.
- Do you have a storage unit? If so, do you really need it?
- Consider using an online or consignment platform to purchase or sell clothes you aren’t wearing.
I hope these ideas spur you to think creatively about your spending and set you on the path to a brighter financial future in 2021.
