Now that the new year is underway, many people are working on their resolutions. Getting the family’s finances under control is a common goal, but figuring out how to begin can be a challenge. This is especially true if you are working on several mini-goals, like both lowering your debt and decreasing your expenses. Luckily, there are plenty of things you can do to get underway. Here are ten tips to get your finances under control.
10 Tips to Get Your Finances Under Control
All of the tips below are designed to be simple and effective. That way, you can get started today and see results as quickly as possible.
- Create a Budget
While it is one of the hardest items on the list, it is also the most necessary step. You can’t get your finances under control if you don’t have a plan in place.
Start by reviewing your spending. If possible, look back at least three months and see how much you spend in major categories, including (but not limited to):
- Housing (Rent or Mortgage)
- Utilities
- Insurance (Homeowner’s, Renter’s, Auto, etc.)
- Groceries
- Debt Payments
- Dining Out
- Entertainment
- Clothing, Shoes, Accessories
After taking a look at your habits, develop a reasonable budget. You can choose to cut back in certain categories, if possible. Additionally, you can proceed through this list to find other tips to help you reduce costs before making your budget final.
- Get New Insurance Quotes
If you haven’t gotten a quote for homeowner’s, renter’s, or vehicle insurance in a few years, now is the time to do it. You could be overpaying for insurance, making that expense higher than it needs to be.
Reach out to several companies and request quotes. Make sure the coverage levels and deductibles are the same. Otherwise, the comparison is harder to manage.
Then, select an affordable option that best meets your needs.
Remember, when you ask for a quote, there is no obligation to buy. Don’t feel pressured into selecting a company just because you asked for a quote, and be wary of insurers that are incredibly pushy.
- Review Your Credit Report
Each year, everyone can access their credit reports for free at AnnualCreditReport.com. The service is backed by the US government, and you don’t have to provide a credit card number or risk signing up for monitoring services you don’t want.
Take a moment to pull at least one of your reports. Then, review it for errors. Any negative event that isn’t correct is undeservedly harming your credit score, so you want to get it corrected quickly.
Plus, if you find an error, you may want to pull your other two reports as well, as the problem could be present on each of your reports. All of the three bureaus have a unique process for disputing information on your credit report, and they have to be contacted separately.
While disputing erroneous information can take time and effort, it’s worth it. When the incorrect information is removed, your credit score could rise, giving you access to better interest rates.
- Negotiate Your Interest Rates
If your credit score is higher than it was when you applied for a credit card, consider requesting an interest rate reduction. The process is pretty simple: contact the card issuer and ask them for a lower rate.
Customers in good standing may receive an immediate rate reduction. Just make sure your score is actually better than it used to be, as drawing attention to a lower score could result in a rate hike instead.
- Open an Online, High-Interest Savings Account
Having some money in the bank is critical for financial health. An emergency fund acts as a monetary buffer against the unexpected, allowing you to avoid debt and ensuring you can pay bills you weren’t anticipating.
By opening a high-interest savings account, you can earn more from the money you have in savings. By selecting an online-only bank, you make the cash just slightly inaccessible since it isn’t connected to your main spending account. However, you can get to it quickly in an emergency.
Just make sure that you don’t use the money for anything but genuine emergencies. You may also want to avoid carrying an ATM card that connects to the account, keeping it safely locked away instead. That helps you prevent from using the money for impulse purchases.
- Automate Your Savings
When you save automatically, it is much easier to build up the cash in any account. Instead of transferring money into your savings or retirement accounts by hand, set up an automatic transfer each month, from every paycheck, or using a system that is right for you.
Then, note those transfers in your budget, ensuring you remember they are going to happen.
- Try the Snowball Method
Paying off debt is hard. However, if you use a methodical approach, it can be easier to manage.
The snowball method is a popular option for paying off debt and helps you avoid the most interest. Get a piece of paper and write down all of your debts. List the company, amount you owe, interest rate, and minimum payment as it stands today.
Then, identify the highest interest debt, and put every extra cent possible toward paying it down. Whether that’s an additional $5 a month or $500 isn’t as important as making it a primary focus. On all of your other debts, pay only the minimum payment.
Once you get that first debt paid off, take the amount of that payment and any extra money you can pull together and add it to the minimum payments for the next highest interest debt. Continue using that approach until you have everything paid off.
It does take time and diligence, but the snowball method is genuinely one of the most efficient ways to tackle debt.
- Refinance Student Loans
Not everyone realizes that federal student loans are not necessarily the most affordable options available. Some private student loan refinancing programs actually offer lower interest rates, making it possible to reduce your payments and the amount of interest you pay, depending on your exact situation.
If you haven’t taken a close look at your student loans since securing them, take a look at your rates and see if something better is out there. Since many student loan payments are large (and so are the debts), even a small interest rate reduction can make a big difference.
- Rethink Your Cell Phone Plan
There are tons of cell phone plans on the market today, and they run the gamut when it comes to cost. If you aren’t in a contract, take time to comparison shop by looking at post-paid and pre-paid plan options.
Many of the pre-paid phone services run on the same national networks as the large post-paid providers (like AT&T, Sprint, T-Mobile, and Verizon) even if they don’t share a name with one of those companies. That means you can get the same level of service at a fraction of the price in some cases, especially if you have less than four cell phone users in your household.
- Try a No-Spend Week (or Month)
No-spend weeks can work wonders if you need to control impulse spending. Instead of using your usual shopping strategy, you plan ahead, buying all of the basics you need like groceries, gasoline, and other regular living expenses.
Then, for one week, you don’t buy anything. By relying on only on what you already have, you can eliminate a lot of small purchases that can wreak havoc on a budget, making it easier to stay in the green.
If you are feeling daring, you can even extend it to one month. However, you may need to either buy gift cards for costs like gasoline or use willpower to prevent impulse purchases when you stop to use the pump.
All of the tips above can help you get your finances under control. Consider giving one or all of them a try, and see if you can’t get yourself moving toward a better financial future.
Do you have a tip to help people keep their finances under control? Share it in the comments below.
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