The New Year is quickly approaching, and most American’s will start making a list of their financial resolutions for 2020. At the top of most people’s list will be “save more money.” The following tips are a few easy ways to clean up your finances for the next year and into the foreseeable future.
Stick to a Budget
While budgeting can be complicated, it’s one of the most straightforward money managing tactics anyone can employ. Create a list of monthly recurring expenses, including sporadic expenses, quarterly payments, and membership renewals, and then compare the total money spent to the overall earnings. If there isn’t much left over for savings, go back through your expenses and decide where to cut costs.
Pay off Costly Debts
Credit card debt is a common occurrence for most individuals. The longer you carry debt or some balance on credit cards or loans, the more money you end up paying in interest. Start by paying down a chunk of the debt each month. If you can afford more than the monthly payment, the quicker you will be able to reduce the amount you owe!
Track Your Non-Essential Spending
Regardless of what you buy, some things are just non-essential items. If you can figure out what you are spending on something that you do not necessarily need each month, you can cut the cost of these items in half. Start simple and shave off $50 – $100 from that figure and work your way up to cutting the number in half.
If you are still struggling to cut the non-essential spending in half, consider adopting the 50-30-20 rule. This rule states that 50% of your take-home income goes towards essentials, rent/mortgage, loan payments, other bills, 30% goes towards non-essentials, and 20% towards savings.
Each month, schedule a recurring amount of money to be transferred from your checking account into a linked savings account. This cuts down on having to remember to transfer money into a separate account, and it reduces the risk of spending the money you would put into a savings account. Some people decide to have part of their paycheck directly deposited into a separate savings account, so they never actually see the money.