The start of the New Year is the perfect time to take a good, close look at your finances. It’s an opportunity to review and reflect on what you did right in the last year, and what you might not have been so great at doing. The beginning of a new year is also a great time to commit to a new or improved financial plan and to getting your finances off to a great start.
Take a Look at Your Budget
As the year begins, you might need to adjust your income and expenses and tweak your budget somewhat. Depending on your circumstances, a new year can mean a raise and a boost in income. It can also mean that certain expenses, such as the premiums you pay for health insurance, will increase. Compare your monthly expenses to your income at the start of the year, to see where you need to make some adjustments. Figure out what you’ll do with any increase in income, whether you decide to put the extra money towards paying off debt or saving for retirement. It might be that your raise is just enough to cover the increase in your cost of living.
Look at What You’re Spending
Along with reviewing your budget, the New Year is an ideal time to review your spending on non-essentials. You can either look back on past spending or decide to track your spending for the next two or three months to see where your money is going. Tracking your spending will give you an idea of whether or not your budget is realistic and actually in line with your monthly expenses.
Make a Plan for Debt
If you’ve been paying the minimum on your debts, are beginning to feel overwhelmed by your debt payments, or worry that you’ll never get out from under them, the start of a new year is a great time to take a step back and come up with a plan. One simple plan is to focus on paying the debt with the highest interest rate first. If you aren’t sure how to approach your debts and are worried you’re unable to afford them, non-profit credit counseling can help. You can work with a credit counselor to together a budget and to figure out the next steps to take to get out debt for good.
Set a Savings Goal
If you don’t have much debt or have recently paid yours off, you can use the New Year as an opportunity to set a savings goal. Look out at the 12 months ahead. Ask yourself what you’d like to have in your retirement account, emergency fund, or other savings account by the year’s end. Perhaps you want to buy a house in a few years. You can commit to saving half or a quarter of your down payment this year. Once you have a goal in mind, break it down into monthly steps. For example, you might decide to save $200 per month towards your goal.
While the saying “New Year, new you” might be a cliché, the start of the year can be the perfect time to reflect on your financial situation. Take some time to make sure you’re on track when it comes to reaching financial goals or get the help you need to get on track. If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact us today for a free financial assessment with one of our certified credit counselors.
Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.
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