The beginning of a new year is the perfect time to improve your finances, even though it sounds like a dull task. For most people, the idea of sorting out their finances isn’t very appealing, but it can help you to spend less and save more. It can even help to improve your credit score, which can help you to buy a house or a car.
It doesn’t have to be a difficult task to get your finances in order for 2017. Our six easy-to-follow tips will help you, just in time for the new year to begin.
Compile your 2016 expenses
Sit down and take the time to accurately assess your spending in 2016. Start by writing down your earnings, then write down your main outgoing expenses (such as rent, bills, food, gas, savings, and insurance). Then write down your entertainment expenses (such as nights out, vacations, clothes, snacks, and hobbies). This will give you a clear look at your outgoing expenses, so you can know roughly how much you spend each month.
Lots of people are shocked by their finances when they see them clearly. They might find that they’re spending more than they earn, or that they spend too much on takeout food and eating out. This is helpful, as the information can be used to create a personalized budget that you’ll be able to stick to.
Reduce your fixed expenses
If you want to save more money in 2017, try reducing your expenses. You could renegotiate your cell phone plan for a cheaper plan, or you could cut your cable bill by canceling channels that you don’t watch. You can also look for cheaper rates for auto insurance if you drive a car. Normally it’s worth staying with the company you’re already with, as you’ll probably get a discount for being a loyal customer. However, you might be on an expensive plan, so contact your auto insurer and find out if they have any better deals.
If you want to save a large amount of money, one of the best options is to move somewhere cheaper. Rent is often one of the biggest fixed expenses, so it can be difficult to save if you spend most of your earnings on rent.
Make a spending plan for 2017
Once you’ve compiled this year’s expenses and reduced them, you can start to create a budget for next year. If you reduced your expenses, you’ll find that you have extra money left over at the end of each month. You can choose to save this money, or reinvest it—but try to spend it wisely!
If you want to create a spending plan for 2017, consider using an online budget planner. You simply need to type in some information about your income and spending, and then the planner will generate a budget plan that is tailored to your spending habits. You can also make your own in a spreadsheet or a notebook.
Create a financial file
A financial file is a record of every bill that you receive and every payment that you make. You can use either the internet or a paper filing system—whatever works best for you. Gather up your receipts and bills, and put them all in one folder together. Try to put all of your bills and receipts in the folder from now on, so that you can always review your spending habits. This will help you to pay bills on time, and you’ll be less likely to be caught off guard by unexpected costs.
Check your credit score
Order your credit report online and check your credit score to see how you’re doing. If your credit score is over 720, you’re doing really well! If your credit score is lower, you can use 2017 as an opportunity to improve it. This can be the year that you change your finances for the better.
Pay one monthly bill with your credit card
You can improve your credit score by paying one monthly bill, such as your cell phone bill, with your credit card. Set the payment to auto-pay so that you never miss a payment, and watch your credit score improve as you consistently make payments.
Part of getting your finances in order may involve changing banks to one with lower (or no) fees or more free ATMs. To make sure you’re ready, check out this article to learn what you need to open a bank account online.
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