Welcome to 2015! If 2014 wasn’t exactly your best year, financially speaking, it’s time to do something this year to turn that around.
Now, to be honest, the 6 Steps below have been featured on our blog before, some of them numerous times. But, if you’re here and still didn’t have a good financial year last year, it might just be a good idea to read them again (and then actually start using them). Enjoy.
Step #1: Pay yourself first by Automating your Savings.
It’s easier than ever before to automate your savings and, as the experts say, pay yourself first. There’s really no better way to make sure (absolutely sure) that you start saving money than to have it automatically taken out of your check before it gets in your hot little hands. Ask the HR department at your job or your bank and they will set you up right away.
Step #2: Figure out what your debts are so that you can start paying them down
Ironically, many people don’t pay off their debt like they should simply because they don’t know exactly how much they actually owe, or don’t realize how deeply in debt they actually are. Psychologists say that the simple act of sitting down and writing out all of your outstanding debts can be an amazing eye-opener and spur you to not only organize yourself financially but start paying those debts faster.
Step #3: Consolidate your savings and checking accounts
Practically all bank accounts come with service fees of one kind or another. If you have several accounts, you’re probably wasting money somewhere in one of them, if not several. Take some time to look at all of your accounts, determine which ones you actually need or are the most economical, and get rid of the rest.
Step #4: Reduce your monthly expenses
Many people overspend in several areas of their life and waste hundreds, if not thousands, of dollars every year. Reducing your monthly expenses on things like entertainment, clothes shopping, eating out and entertaining, among other things, can save you an absolute ton of money. In order to do that however you’ll need to do what we suggest in Step #5.
Step #5: Create a working home budget
We’ve talked about this numerous times in the past and the reason is simple; setting up a budget is one of the all-time best ways to start saving more money and paying down more debt. Today there are so many free programs and apps that you can use to do this that there’s really no excuse anymore not to. A working budget can make it so much more easy to achieve your financial goals that you won’t believe you survived this long without one.
Step #6: Fund an emergency savings account
Another step we’ve talked about before, having an emergency savings account that will pay for 6 months to 12 months’ worth of bills is a must in today’s world. Now, to be frank, some experts say that you should invest this money into short-term investments that you can quickly turn liquid because, if you don’t, you’ll lose out on compounded interest if you don’t use your emergency fund for a few years. While that might be so, if you don’t have any emergency fund whatsoever right now, don’t worry about investing it, simply worry about putting money aside for a rainy (or really, really bad) day.