Do the January Money Cleanse
| Posted in Bank Blogs
It’s a fresh new year and a new opportunity to take charge of your life, including your financial life. From paying bills and managing everyday expenses to saving for emergencies and the things that matter to you, January is the perfect time to focus on your finances and put yourself in a position to succeed.
Here are some steps to help you get started.
Review your budget. Having a budget is essential to covering your monthly bills, building savings, and planning for your short- and long-term goals. If you don’t have a budget, here’s how to create one:
- Start by reviewing your monthly expenses, such as your housing payment, utility bills, car payments, groceries, gas, and other recurring costs.
- Don’t forget to review discretionary spending, like dining out, entertainment, streaming services, and gym memberships.
- Review your monthly income.
- Determine how much you can save for emergencies and planned goals.
- Subtract your expenses and savings from your income to see where you stand.
- If your expenses exceed your income, look for ways to reduce spending or increase income (e.g., a part-time job or side hustle).
- Review your budget every month and adjust as needed.
Tackle debt. Carrying extra credit card debt from the holidays or from overspending throughout the year? With today’s high interest rates, that debt can be costly and hold you back from reaching other financial goals.
- Review all your debt, including balances and interest rates.
- Focus on paying off high-interest debt first.
- Build debt payments into your budget.
- Put credit cards on ice while you work on paying them down.
- Consider transferring high-interest balances to a lower-interest credit card if it makes sense for you.
Build your savings. Savings equals security. It helps you handle unexpected expenses like car repairs, home maintenance, or medical bills and makes it easier to reach your goals, like buying a home or paying for college.
- Set up automatic transfers from checking to savings
- Increase your savings when you get a raise or bonus.
- Save tax refunds or other windfalls instead of spending them.
- As balances grow, consider a high-yield savings account or a certificate of deposit (CD).
Maximize your credit. At some point, most people need to borrow. To make it more affordable, you’ll need a strong credit score, a numerical calculation that shows lenders the likelihood you’ll repay money they lend you.
- Check your credit score to know where you stand.
- Keep balances low.
- Pay every bill on time, every time.
- Avoid closing older credit accounts, since the length of your credit history matters.
- Be selective about applying for new credit.
You’ve got this!
There’s no time like the present to build the financial life you deserve. Follow these steps, and you’ll be well on your way.