It's that time of year again when we reflect on the past twelve months and set resolutions for the coming twelve. Often, our New Year's resolutions revolve around self-improvement in various areas of our lives — fitness, relationships, and personal growth. But what about our finances? Why shouldn't we make resolutions to improve our financial wellness as well? Here are some ideas to get you started.
Evaluate your insurance policies - make sure you are adequately covered
When it comes to insurance, many of us are underinsured. We choose our deductibles based on what we can afford at the time, rather than what we would need if something went wrong. And often, we only purchase the bare minimum insurance required by law. However, this can be a risky strategy. If you are in an accident or your home is damaged, you could end up paying a lot more out of pocket than you ever expected. That's why it's important to regularly review your insurance policies and ensure you are adequately covered. You may not be able to prevent an accident or disaster from happening, but you can protect yourself financially by making sure you have the right coverage.
Check your credit card interest rates and switch to a card with a lower rate
Are you being crushed by credit card debt? You're not alone. In fact, the average American household has over $5,000 in credit card debt. And with interest rates averaging around 18%, it's no wonder so many people are struggling to get out from under their debt load. But there is a way to save money on interest payments: check your rates and switch to a card with a lower rate. It's really that simple. By shopping around for a new credit card, you can potentially save hundreds of dollars each year in interest payments.
Look for waste in your monthly expenses - evaluate recurring subscriptions, etc.
One way to find waste in your monthly expenses is to evaluate your recurring subscriptions. Do you really need that streaming service that you never watch? How about that gym membership that you never use? If you're honest with yourself, you can probably find a few subscriptions that you can cancel and save yourself some money. Another way to find waste in your monthly expenses is to take a close look at your budget. Where are you spending more than you need to? Are there any areas where you could cut back? By taking a close look at your spending, you can quickly identify areas where you're wasting money and make some changes to improve your financial situation.
Plan for taxes - start thinking about what deductions you can take come tax season
As tax season approaches, it is to early to start thinking about your taxes. While it may seem daunting, a little planning can go a long way in making tax season less stressful. One of the first things to do is to start gathering all of the documents you will need, such as W-2 forms and receipts for charitable donations. You should also take some time to familiarize yourself with the different deductions and credits that you may be eligible for. For example, if you are a homeowner, you may be able to deduct mortgage interest and property taxes.
Make a budget and stick to it
Creating and sticking to a budget may not be the most exciting way to spend your time, but it is crucial for financial stability. The first step is to calculate your monthly income and expenses. Include all fixed costs, such as rent and insurance, as well as variable costs, such as groceries and gas. Once you have a clear picture of your finances, you can start to make adjustments. If you are spending more than you are bringing in, look for ways to cut back on unnecessary expenses. If you have room in your budget, consider setting aside money for savings or investing. The key is to find a balance that works for you and stick to it!
Organize your finances
If your financial life is a messy jumble of unpaid bills, unopened bank statements and expired coupons, it's time to get organized. A little bit of effort now will pay off in the long run - you'll save money, reduce stress and maybe even get a better night's sleep.
The first step is to gather all of your financial paperwork in one place. Create folders for important documents such as tax returns, investment statements, and mortgage papers. Once everything is sorted, you can start setting up calendar reminders for bills due dates and other important deadlines. If you have trouble keeping track of your finances, there are many helpful apps and websites that can make things easier.
By taking some time to organize your finances, you can gain a better understanding of your money situation and make better financial decisions in the future. So don't put it off any longer - get organized today!
Final Thoughts
Although it may seem like a lot of work, taking the time to evaluate your finances and make small changes can save you money in the long run. By following these tips, you’ll be on your way to a more financially secure year. Have any other suggestions for ways to save money? Get in touch to continue the conversation!