Good riddance to 2009, and hello 2010, the year you get your financial act together. Commit to improving your financial health next year, and get a jump-start by identifying one thing you could begin doing today to improve your personal financial well-being
1. Spend less
- Set a budget. Look at how much you bring home each month and subtract all your fixed expenses, such as mortgage, utilities, and gas for your car. Then divvy up what’s left over among your other expenses
- Reduce your grocery bill by shopping sales, using coupons, buying store brands, or removing junk food from your list.
- Pay for your purchases with cash or a debit card, which takes money directly out of your checking account (don’t forget to record your purchases in your check register).
- Give yourself 72 hours to think over a purchase. Chances are you’ll forget all about it.
- Work off stress by exercising, not shopping.
2. Save more
- Pay yourself first. Set up automatic deposits of 10% of your paycheck into a savings or retirement account.
- Save in an interest-bearing savings account, such as a money market account, money market fund, or CD. Contribute to your 401(k) and save on taxes, too.
- Visit bankrate.com to compare interest rates. Before opening an account, carefully read the fine print. In the wake of the recession, many banks are enacting strict regulations.
3. Limit credit card use
- Use cash. Studies show people spend more when paying with plastic—even at fast food restaurants.
- Ideally, use your credit card only for emergencies.
4. Pay down debt
- Set aside an amount each month for paying down your debt.
- Prioritize which debt to pay by starting with the highest interest first. When it’s paid off, tackle the account with the next highest interest rate.
5. Start an emergency fund
- After paying off your credit cards, start an emergency fund to cover a loss of income or unexpected expenses. Setting aside six to nine months salary is usually recommended.
- Make sure to use a money market fund or other easily accessible account for your emergency fund. Find a good interest rate by researching online and comparing with your local banks and credit unions.
6. Check your account statements monthly
- Review your bank account and credit card statements when they arrive. One small mistake or unauthorized purchase can cause you big headaches later and hurt your credit score. The sooner you investigate potentially fraudulent charges, the more likely you’ll be able to clear them up.
7. Keep tabs on your credit report
- Maintaining a good credit history is essential to achieving financial peace of mind. Make it a tradition to check your credit reports at the beginning of each year.
- Keep tabs on your credit report throughout the year with credit monitoring. Many credit monitoring services will alert you whenever there is a change in your report that you should verify.
Each new year brings us a chance to bid farewell to bad habits and resolve to practice good ones. The more you know about your finances and the more attention you pay to them, the more solid your financial future will be. If seven changes seem like too many to tackle at once, start with one, and then add another each month or two.At the end of next year, you’ll feel proud and confident knowing that you have your finances under control.
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