It’s a new year, and with a new year comes new goals, and for many of us these goals include tackling our finances. The last few years have been pretty rough on most of us, even if we have been stringent with our finances. And many of us have turned to doing a loan application online.
However, now it is time to settle your finances, and figure out how you can better manage your funds.
If you only had a take-home pay of around $2,000 each month, how can you reasonably pay for accommodation, health care, insurance, food, and debts, and still enjoy yourself without running out of cash and going into more debt?
You have to cover a lot with not a lot of money, how can you settle this and keep yourself financially stable? The answer is in budgeting.
However, there is a lot you need to consider, so, join us in taking a look at some top tips on how you can settle your finances in the new year, and do better for yourself financially!
Start Out With A Budget
The first thing you should do is begin with a budget. Budgeting is the first key to settling finances. A budget can prevent you from overspending, and help you keep track of where all your money is, so that you are always in the green.
To make a budget you can adhere to a plethora of different plans, you can use a 50/30/20 rule, or a 70/20/10 rule, and so on, it is up to you and what your priorities are. However, to make a good budget you should first calculate your income and expenses.
Make sure to always manage a budget and check in on your debts on a regular basis to ensure everything is on track, and then, if you need to alter anything to make it function better, you can! With no worries!
Let’s look at some ways to help you with your budgeting process:
Earnings After Tax
If you are lucky enough to get a regular paycheck, then you will probably receive a set amount each month, and will get automated deductions such as your 401(k), savings, insurance and so on, so this should help you see your overall expenses.
Or if you make other incomes, such as a freelance income or side business, you will need to subtract tax and business expenses from this.
Regardless of what you make, you should ensure that each month you know exactly what your income is after tax. Knowing this can be extremely useful!
Pick A Budget Style
Once you know your income after tax, you should also choose a budgeting plan. Your budget will need to cover all of your needs, and probably some of your wants too, as happiness is important, and if you are unhappy you are more likely to spend frivolously.
You should also be saving for emergency situations and for your long-term future.
You can choose a budget style such as the 50/30/20 style, the 70/20/10 style, the zero-based budget, or even the envelope system.
Track How You Spend
Part of budgeting is tracking your progress, recording how you spend, and using online tools to help you budget and save better.
You should track how you spend before you make your budget, so you can focus on areas you need to improve in, as well as when your budget is up and running too.
One of the best ways to ensure that you are never indebted to anyone, and make sure your money goes where it should when it should, is to create automated payments.
Have bills, insurance money, and rent and mortgage, or even debt repayments all automated so that these payments go out of your accounts on time, and you are never late on a payment.
Remember that expenses, priorities, and income will change over the course of time, so practicing active management of your budget is important.
You should revisit it each quarter so that you are always on top of it no matter what may change.
What Are Your Short-Term Financial Goals?
Part of settling your finances is to have financial goals. Goals help to motivate us to stay on top of things and manage our money more effectively.
Consider your goals.
Short-term goals include goals in the next few years, perhaps things such as buying a house, college, getting a new car, starting a family, and so on.
Consider your goals, and how you can plan ahead to these goals financially.
What Are Your Long-Term Financial Goals?
Then, you should also consider long-term financial goals. These can include things such as your retirement, or if you have just become a parent, perhaps putting together a fund for your little one to go to college when they are older.
These goals may not need as much attention as your short-term goals, but can still serve as motivation to oversee your finances more, and require you to stay on top of your savings and spending habits.
Don’t Forget An Emergency Fund
You never know when an important home appliance may break, if your car may need an emergency fix, or if yourself or a relative may have an accident. Having an emergency fund is a cover for any situation that could prove to be problematic financially.
When things fall apart, and you get sick, the last thing you need is stress about money, emergency funds stop any additional stress. Therefore, you should incorporate this into your financial plan.
Don’t Forget To Tackle Those Debts!
Always tackle debts as you go into a budget plan. Debts can easily drag you back and keep you chained down to bad habits and a circle of financial problems.
Try to repay your debts as soon as you can and even incorporate repaying debts into your budget. Build credit by ensuring you never miss a payment!