How are those New Year financial resolutions coming along? If you're feeling like your financial situation is spinning out of control, or you just need to get yourself back on track with budgeting, use these five tips to perform a financial checkup.
How are those New Year financial resolutions coming along? Did your budget goals stick around or have you fallen back into old spending habits? If you're feeling like your financial situation is spinning out of control, or you just need to get yourself back on track with budgeting, it's time for a financial checkup. You don't need a complicated system to keep your financial house in order, and can start making positive changes today. Here are five ways to take control of your finances and get yourself back on a healthy financial track:
#1: Determine Whether Your Budget is Working for You
Have you inadvertently set yourself up for financial disaster? If you created a budget that isn't very accurate, or you gave yourself too much freedom in the disposable income category, your budget really won't be doing much for you. Your budget doesn't have to be set in stone, but it does need to be accurate enough to serve as a "blueprint" for reaching your financial goals. Make sure you have included all fixed and variable expenses, and sources of income. If you have a surplus, allocate funds to pay down debt or build an emergency fund.
#2: Review Your Credit Card Balances
How many credit card accounts do you have? What are the balances and interest rates? How long have you carried these cards? Take stock of your current credit card debt load and list all balances from high to low. Are there any card balances you can eliminate or reduce drastically with your current savings account? How much do you need to pay off the card with the highest interest rate? Add some of your credit card payoff goals to your monthly budget as an expense so that you are continuing to pay down debt - not just making minimum payments.
#3: Log Every Expenditure
Whether you just purchased a new subscription online or bought a cup of coffee from the neighborhood coffee shop, write down everything you purchased today and tally up the amount. Do this for a few days and see if you are spending money that you haven't technically budgeted for. Everyday expenses like these may be eating away at your savings account without you realizing it. Logging your expenditures can make you more conscientious about your spending habits and put you in a better position to just say "no" next time.
#4: Review Your Biggest Spending Categories
Besides housing expenses and insurance premiums, what are your biggest spending categories. Take a good look at your budget and see if any of your largest spending categories fall under the variable expenses column. Remember that variable expenses are usually in your control and you may be able to cut back more than you realize. Prioritize your variable expenses based no your wants, needs and personal standard of living. What can you do without for a while? How can you reallocate funds from a certain category? You will have more control over your finances when you have a good idea of where your money is actually going.
#5: Set Up a New Savings Account or Emergency Fund
Secure your financial future by setting up a new savings account or emergency fund. These accounts will serve as a cushion for hard times, and they need to be completely separate from your other accounts. Make a commitment to contribute to these accounts each month, and set up contributions as an "expense" under the fixed expenses category of your budget.
Getting into the habit of contributing to this account automatically and consistently can help you save more in the long-run, and also prevent you from spending your hard-earned dollars as soon as they come in. You can even set up an automatic deposit from another savings or checking account. Authorize an automatic transfer to this account with your bank so you don't even have to think about it!
How are those New Year financial resolutions coming along? Did your budget goals stick around or have you fallen back into old spending habits? If you're feeling like your financial situation is spinning out of control, or you just need to get yourself back on track with budgeting, it's time for a financial checkup. You don't need a complicated system to keep your financial house in order, and can start making positive changes today. Here are five ways to take control of your finances and get yourself back on a healthy financial track:
#1: Determine Whether Your Budget is Working for You
Have you inadvertently set yourself up for financial disaster? If you created a budget that isn't very accurate, or you gave yourself too much freedom in the disposable income category, your budget really won't be doing much for you. Your budget doesn't have to be set in stone, but it does need to be accurate enough to serve as a "blueprint" for reaching your financial goals. Make sure you have included all fixed and variable expenses, and sources of income. If you have a surplus, allocate funds to pay down debt or build an emergency fund.
#2: Review Your Credit Card Balances
How many credit card accounts do you have? What are the balances and interest rates? How long have you carried these cards? Take stock of your current credit card debt load and list all balances from high to low. Are there any card balances you can eliminate or reduce drastically with your current savings account? How much do you need to pay off the card with the highest interest rate? Add some of your credit card payoff goals to your monthly budget as an expense so that you are continuing to pay down debt - not just making minimum payments.
#3: Log Every Expenditure
Whether you just purchased a new subscription online or bought a cup of coffee from the neighborhood coffee shop, write down everything you purchased today and tally up the amount. Do this for a few days and see if you are spending money that you haven't technically budgeted for. Everyday expenses like these may be eating away at your savings account without you realizing it. Logging your expenditures can make you more conscientious about your spending habits and put you in a better position to just say "no" next time.
#4: Review Your Biggest Spending Categories
Besides housing expenses and insurance premiums, what are your biggest spending categories. Take a good look at your budget and see if any of your largest spending categories fall under the variable expenses column. Remember that variable expenses are usually in your control and you may be able to cut back more than you realize. Prioritize your variable expenses based no your wants, needs and personal standard of living. What can you do without for a while? How can you reallocate funds from a certain category? You will have more control over your finances when you have a good idea of where your money is actually going.
#5: Set Up a New Savings Account or Emergency Fund
Secure your financial future by setting up a new savings account or emergency fund. These accounts will serve as a cushion for hard times, and they need to be completely separate from your other accounts. Make a commitment to contribute to these accounts each month, and set up contributions as an "expense" under the fixed expenses category of your budget.
Getting into the habit of contributing to this account automatically and consistently can help you save more in the long-run, and also prevent you from spending your hard-earned dollars as soon as they come in. You can even set up an automatic deposit from another savings or checking account. Authorize an automatic transfer to this account with your bank so you don't even have to think about it!
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