The new year is the perfect starting point for those who want to make any personal or lifestyle changes. While some people may want to give up a bad habit, others are keen to get their finances on track as they head into a new decade. Some may simply need to open a bank account online, whereas others may need to rework their entire budget. Whatever the case, the following are five steps that can be taken to ensure that your finances are on the right track in 2020.
1. Give Something Up
There are always — always!—areas in your budget where you’re overspending and could cut back on. Making coffee at home means less spent on takeaway coffees. Riding your bike to work means less money spent on gas. And those memberships that aren’t being used can be canceled. This will ensure that your paycheck is being spent efficiently, and every penny has its place. Giving something up and putting the funds you would have used towards savings means that you’ll soon have a rainy-day fund.
2. Stick to a Budget
We know it can be difficult to stick to a budget, but those who are unsure of their spending habits will struggle to gain control of their finances unless they keep one. A budget will identify your income and record your expenses, usually on a monthly basis. You can categorize your budget like rent, utilities, insurance, entertainment, dining, etc. The budget can be changed if necessary, but it’s important to first understand the ins and outs of your bank account each month.
3. Review Your Bank Accounts
Oftentimes someone will open a bank account online only to forget about it moving forward. Using bank accounts in the right way means that it’s easier to get your finances back on track for 2020. If you’re saving a regular amount, then those who open a bank account online could find that there are better interest rates than the ones being offered. You may also want to research the bank accounts you already have open and see how you could do better. For example, check out Bank of America banking fees and evaluate whether you’re actually losing money using their services. There are also bank accounts that offer different levels of interest, which could save you even more money.
4. Understand Your Credit Rating
Although everyone would like the best deals when it comes to credit, the harsh reality is the lower a credit rating is, the more you’re likely to pay for financial services. A good credit rating can make all the difference when taking control of your finances, so it’s important that the information available isn’t ignored. Searching for inconsistencies and monitoring outstanding debts may not give you an instant improvement in your credit score, but it will set you on the right path for 2020.
5. Plan for the Unexpected
Nobody likes to think of the worst-case scenario, but not planning for unexpected events puts you at risk of emptying your entire savings and going broke. Putting money aside means that you’re more prepared for unexpected bills and emergencies, and you won’t have to rely on loans and credit cards, which will add up due to the accrued interest. Preparing for the unexpected can be as easy as setting up a transfer that rounds up the latest spend and deposits the difference in an allocated bank account.
The time it takes to get your finances on track can depend on many factors, but using the five steps mentioned above will ensure that you’re able to see the differences sooner rather than later. Happy saving!
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