Every year, you probably make a list of New Year’s Resolutions. From small tweaks to sweeping declarations of change, you may promise to get physically, mentally, and financially healthy. While you may have the best of intentions, it’s not always easy to follow through. That’s why you need a plan. January 1st may be perfect time to focus on finances—with a new tax year ahead. Here are few resolutions that might help improve your financial health:
Create a Financial Budget for the New Year
A critical aspect of financial responsibility is knowing what you earn and spend and living within your means. Create a budget that takes into account all your earnings and your spending habits. There are several resources to help you create a budget including step by step instructions and an easy to use worksheet from the Federal Trade Commission to help you get started. If worksheets and spreadsheets aren’t your cup of tea, there are budgeting apps and money saving apps. What will work for you?
It’s important to note that the budget you create for the New Year may change over time. Increased rates, new fees, and unexpected expenses may mean you need to adjust your budget throughout the year. What’s more important than being accurate is being consistent – consistently checking in on your budget. Make sure you know where your money goes and that you always work to help achieve (or maintain) financial security.
Review Your Subscriptions in January
Review all your paid subscriptions – and keep an eye on them throughout the year – for a manageable goal that has the potential to save you money. A recent survey found that consumers spend approximately $133 more a month than they realize on subscriptions services.
It’s easy to forget about a subscription fee since most are automatically charged. If you don’t closely monitor your spending, those small fees can squeak by unnoticed for months or even years. In fact, 42% of subscribers surveyed pay for subscriptions they don’t even use.
Another common subscription oversight is the free trial. Even free trials often require a payment method upfront. If you neglect to cancel when the trial ends, you’re then charged for the full subscription. The next time you sign up for a tree trial, be sure to set a reminder to reevaluate the service at the end of the trial. You can make a thoughtful decision regarding the value of the service and if it’s truly a fee you want to incur.
Automate Your Payments
Missing a payment is never ideal. Especially if you had the money to make the payment and you simply forgot. Automating bill payments may help you make them on time and avoid late fees.
Most payments can be automated including mortgages, utilities, credit cards, loans, insurance, and of course all those subscription fees. Check with each of your providers and services; most have easy step-by-step instructions on how to set up automatic bill payment either using a credit card or checking account. Some vendors may even offer a discount if you enroll in autopay!
Did you know you could even automate your savings? Set up direct deposit with your employer to have funds sent directly to a savings or investment account. Or create an automated transfer from your primary account into another. Whether you automate spending or savings, be sure you always have sufficient funds. Otherwise, you could incur overdraft fees, late charges, declined payments, and service cancelations.
Consider Consolidating Your Debt This Year
Do you have debt? You’re not alone. The Federal Reserve Bank of New York reports that American households hold $16.15 trillion in debt. That debt can include mortgages, car loans, credit cards, student loans and other debts.
If you have multiple loans, you may want to consolidate. A debt consolidation loan combines multiple loans into a single, larger one that may simplify your finances. You could eliminate several payments and due dates from various lenders for different amounts.
If any of your loans have a particularly high interest rate, which is often the case with credit card debt, debt consolidation may save you money. Through a consolidated debt loan, you may be able to pay off that high interest rate loan, access a better rate, and lower your monthly payments. Your simplified single loan payment can make it easier to keep up with timely payments, which will help you establish and maintain a positive payment history.
At Mariner Finance, we love to watch our customers follow through on financial resolutions. Here’s to a happy, healthy, and financially prosperous New Year!