For many of us, the New Year provides us an opportunity to look back at the year that has just been and gives a new impetus to make a variety of resolutions. The most common of these resolutions are usually in the area of health, with the aims being to take more exercise or improve our diet by eating healthier foods. However, the New Year is also an excellent opportunity to get your financial affairs in order and make resolutions that will see you cut costs and make savings.
- Calculate spends and reassess budget
For one month write down every cent you spend on things such as rent, food, gas, clothes, insurance, entertainment – everything. This simple step will give you a good base to start from, allowing you to calculate exactly how much you are spending, what your budget is and where savings could be made.
- Shop around for better deals
With the information from the first step, investigate where you can make savings and where you can get better deals. One of the most obvious places that savings can be made is in your weekly food shop. Find out which supermarket has the cheapest prices for everyday items and the best offers and deals. Shop around for a better energy deal – there could be a cheaper supplier out there and switching to them could potentially save you hundreds of dollars and slash your energy bills. Insurance is another area to investigate whether you have the best deal. Whether it’s home insurance, car insurance or life insurance – make sure you are looking around to find a better deal!
- Look at paying off debts
Christmas is a time when a lot of money is spent and for some of us this can involve getting into debt however large or small. The important thing to do is start paying down debts. List all outstanding balances and their corresponding interest rates. Then, each month pay the minimum amount due on each account – except pay as much as possible on the highest-rate account or loan. Another option if you have accumulated debt on a credit card with a high rate of interest is to switch the debt over to a 0% balance transfer credit card. This will at least alleviate some concern about interest stacking up. However, should you find yourself struggling with a serious amount of debt, visit https://www.usa.gov/debt for help and advice on how to tackle your debts.
- Create an emergency fund
The New Year is a perfect time to start building an emergency fund. You can start saving however much you want but it’s a good idea to start slowly with a few dollars each month. For example, set aside $1 a day for a month and then double that amount to $2 for the next month. Double that again a month later and if you keep this pattern up, you’d be surprised at how much you can accumulate. This emergency fund protects against the unforeseen circumstances and costs that life can throw up at any moment. There’s a number of calculators you can use to help you plan your fund and how much you should put aside every month.
- Look to the future
Make 2016 the year you start to look further ahead than the coming year. Generally speaking, the earlier you start setting money aside for retirement and college funds for your children the better. One future cost in particular that many people do not think about is the cost of life insurance, will services and funerals – In the United States, we’ve seen the median cost of a funeral rise by 28.6%. This is a trend we’re seeing in other countries to – in the UK, for example, funerals have continued to rise year-on-year well above the rate of inflation. Many Western countries have aging populations, meaning these costs are only sure to rise further in response to the demand.
Of course, this list isn’t exhaustive and there’s many other areas you can consider. The most important thing is to know what you’re saving for and how you’re going to achieve it – it’s easy to say “I want to save money”, but that doesn’t mean the same thing for everyone. Choose a goal such as saving a certain amount over the course of the year and you’ll find it much easier to work towards something tangible.