If one of your New Year’s resolutions was to save money or get your finances under control, it’s likely that you’re still floundering with how to get started. These 8 tips will help you get your finances under control, and you can start with the easiest first.
Your finances can be daunting to consider especially if you have no money saved and are racking up huge credit card bills. It can be tough pick one part to tackle. This week, pick one part of your finances to focus on, and next week pick another. Take it month by month, so you don’t get overwhelmed.
The first thing you should do is track your spending for a week or two. This will give you an average of where you spend the bulk of your money. It’s the best way to deal with the next step. If you don’t understand where you’re spending your money, it’ll be hard to get a rein on overspending or spending frivolously.
Create a Budget
Once you have your spending tracked for a few weeks, you can see where you’ll need to work at creating better financial decisions. Instead of that cup of expensive coffee every morning, you could invest in a coffee maker. It’s a bigger up-front purchase that will pay for itself within a few weeks.
Method to Work for You
Part of figuring out your budget is finding a tracking method that works for you. When your money is deposited directly into your bank account, and you use a debit or credit card for purchases, you’re not really accounting for your spending correctly. You can use an envelope approach or a spreadsheet to allocate your money. Have an entry for rent, utilities and vital expenses and the rest should go into the bank.
Two Bank Accounts
You should have a separate bank account for savings. It gets the money out of the way immediately, and you can be firm with what you’ll spend your money on each week. After paying rent and other expenses, you can leave $50 in your account while the rest goes into a savings account. You’ll know exactly what you have to spend without going over the limit.
Challenge yourself to save money, or have your friends join you in a challenge to save a certain amount by summer. It’s easier when you’re doing it with someone else.
Check Your Credit
Each year, you’re entitled to a free credit report from all three credit agencies. Always check your report for inconsistencies and errors to keep yourself safe from identity theft.
There’s an app for every task you might want to complete and that includes saving money or just getting a handle on your spending. Software like Mint.com can help you really dig deep and understand exactly where you’re spending.