2018 is coming to a close, and that means it’s time to start looking forward to next year. Now is the perfect time to start thinking about how you’re going to take control of your finances. Here are eight tips to help get you started, so you’re ready for Jan. 1.
1. Use the 50/30/20 Rule
Saving money isn’t always easy, especially when you feel like you’re living from paycheck to paycheck. When New Year’s Day rolls around, start by implementing the 50/30/20 rule. It breaks down like this:
- Fifty percent of your paycheck goes to necessities, like bills, food, gas for your car and other things that are necessary for your survival and functionality.
- Thirty percent goes toward wants, like cable, meals out and trips to the movies.
- Twenty percent goes toward paying down debt and savings.
These aren’t hard-and-fast rules. A credit card bill, for example, would fall under “needs,” and if the 50 percent of your paycheck you’ve set aside doesn’t cover it, the rest will come from the final 20 percent.
2. Cook at Home
How many meals do you eat out every week? How much money are you spending at restaurants and fast-food joints when you could be saving money by cooking at home? Experts have estimated you could save more than $800 a year by cooking just one meal at home a week you’d otherwise eat at a restaurant.
3. Start Saving Now
A ton of significant expenditures come up throughout the year, from property taxes to holiday shopping. There are also unforeseen expenses, like broken appliances and medical bills, that can sneak up on you if you’re not careful. While you can’t always prepare for those last-minute expenses, you should start saving for the ones you can plan for as soon as the clock strikes midnight on New Year’s Eve.
4. Improve Your Insurance
No one wants to think about their homeowner’s insurance, but it could save you a lot of money in the long run if something goes wrong. If you have homeowner’s insurance, look at your policy. Is there any room for improvement? Are there any holes in your coverage, or areas you could beef up a little bit to provide more protection? Improving your homeowner’s insurance policy could save you untold amounts of money if something unfortunate happens to your home.
5. Check Your Credit Report
How often do you look at your credit report? If you’re not checking it regularly, you could be the victim of identity theft without even knowing it. You can obtain a free copy of your credit report from each of the three credit reporting agencies — Experian, Trans Union, and Equifax — from the Federal Trade Commission. There are also websites, like Credit Karma, that allow you to monitor changes to your credit report in real time throughout the year. Check your score often, and make sure you report any suspicious activity.
6. There’s an App for That
You’ve got apps for everything from editing pictures to managing your social media accounts. Why not use one of the many apps that are available on both Apple and Android devices to help you keep track of your finances? Apps like Intuit Mint can help you build a budget and monitor your spending, or try Acorn, which will automatically round up your purchases and deposit the difference into a savings account. There are apps to fit nearly any user’s needs and budget.
7. Go Green
Going green isn’t just good for the environment — it’s good for your wallet, too. Reducing your carbon footprint often includes things like switching to LED light bulbs. Not only do they last longer, but they also use less energy, which reduces your power bill. You may not be able to install solar panels on your home — it would be hard to do in an apartment building, for example — but you may be able to opt into a green energy collective through your current power company, reducing your expenses and helping you go green.
8. Separate Your Checking and Savings
It’s convenient to have your checking and savings accounts at the same bank, but that isn’t always ideal. For example, if you have easy access to the funds in your savings account, it might be tempting to withdraw or transfer funds from your savings to pay for bills or things you want. Separate the two accounts. It might take you longer to deposit funds if you have to withdraw money from one bank and deposit it at another, but it will remove the temptation to spend what you have in your savings account until you genuinely need it.
You don’t have to go into 2019 stressed out about your finances. Take a look at these steps and see what you can do to better manage your finances in the coming year.
Photo provided by the author.