Start the New Year with a fresh perspective on your life and identify areas that might need a revamp. It can be challenging to stick to resolutions, but with the appropriate motivation and circumstances, it’s achievable.
Let this year be the year you regain control over your finances and escape the claws of debt. A debt consolidation program could be a great place to start, but here are five money management tips to ensure you meet your goals.
1. Grasp Your Financial Status
Begin your journey to financial stability by establishing a clear understanding of where you currently stand with your finances. Ask your self:
What’s your debt?
What is your income?
What are your expenses?
How much have you saved?
Do you have a retirement plan?
Knowing the answers to these, you can move forward with a strategy.
2. Develop a Feasible Budget
With all the facts at your fingertips, go ahead and develop a monthly budget. There’s an array of free budget planning tools online that can simplify this task.
Use the tools to outline your expense allotment, expenditure areas, and the portions to be paid towards your debt or saved. Check if there are any unnecessary expenses you might eliminate.
3. Establish an Emergency Fund
One cannot predict when dire needs will arise. Therefore, incorporate in your budget a provision to save an equivalent of 3 to 6 months’ worth of your income in an accessible savings account.
An emergency fund safeguards you from falling into credit card debt during hard times. If saving up to 6 months’ worth seems impossible, begin with a goal of $1000 every quarter for as long as you can.
Consider getting a side hustle, if possible, and channel all the earnings into this savings account. With just a computer and an internet connection, you can earn about $100 per day right from your home.
4. Embrace Frugality
At times, economization is vital to help you stick to your budget. Some tips to consider include:
Cooking meals and brewing coffee at home instead of dining out
Eliminating non-essential subscriptions like streaming services
Shopping at second-hand stores or buying generic brands
Using coupons and being on the lookout for deals – you could use a coupon app
5. Enhance Your Credit Score
A poor credit score restricts you from obtaining loans from prime lenders like financial institutions. If they consider your application, it may be at exorbitant interest rates.
Paying all bills on time and avoiding late payment penalties can help keep your credit score healthy. Also, do regular credit report checks (which are free) and rectify any inaccuracies that may affect your score negatively.
Seek Professional Financial Aid
Dealing with debt alone can be overwhelming. When you’re struggling to shake off the shackles of debt, a non-profit credit counseling agency can provide much-needed help. Their qualified Credit Counselors can help formulate a realistic and attainable debt repayment plan.