No one wants to enter the new year with a spending hangover. If you’re looking for a fresh start with your finances, here are some steps you can take.
Break Out the Budget
Dedicating time to updating and maintaining your budget (or creating one for the first time) can help you track spending. This deeper understanding of where your money is going gives you a good overview of where you can cut back. You don’t have to break out the spreadsheets anymore. Instead, you can use a budgeting app like EveryDollar, Honeydue, or YNAB to streamline a process that can seem like one more task.
Put Money Away
It’s time to think about your future and start putting away money into a savings account. While the rule of thumb is to put 20% toward savings and 80% towards household expenses, not everyone can do that. Designating what you can afford toward savings can help with retirement and give you funds to fall back on or use in an emergency.
Pay Credit Cards on Time
If you can’t pay your entire balance off each month, try different repayment methods, like the debt snowball or debt avalanche. But the most important thing is making timely payments, so your credit score isn’t negatively impacted.
Watch Your Credit Score
January may be the time to start if you don’t regularly check your credit score. This will allow you to keep tabs on what impacts your score and by how much. Your credit score is also a good indicator if you’ve been a victim of identity theft, so you can take immediate action if that happens. You can check your credit score for free using services like CreditWise from Capital One or Chase Credit Journey.
Get Credit Counseling
Sometimes, credit card debt can seem overwhelming. If you’re feeling this way, you can get help. When you make an appointment with a credit counselor, they’ll help you create a budget and plan for the future. You can also enroll in a debt management program, through which your counselor can work with your creditors to reduce your interest rate and consolidate your credit cards into one affordable monthly payment customized to your situation.
You can manage your finances through careful budgeting and planning and get back on track in the new year.
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