Like so many others, you’re probably looking forward to leaving this year behind and having a fresh start in 2021. There is no better time than the New Year to start making changes in your life and create new financial habits.
If you want to change your financial picture, first you should set realistic financial goals. Whether you’re hoping to increase your retirement savings, set enough money aside for a down payment on a house, or grow your annual income, there’s no better time to start than in a new year.
Track Your Spending and Budget for Your Savings
One of the best ways to grow your savings is to track your spending. Actively monitoring your income and expenditures will help you to see where your money is going and avoid any impulse purchases. A budget will also offer a valuable perspective on where you spend your money and how you could put it to better use. If your budget shows that there should be money left over, but you’re spending it before you can save it, you can improve your habits.
Cut Back on Your Expenses
To get those savings more quickly, consider giving up or cutting back on one monthly expense and put that money in the bank. This could be a small ticket item that adds up quickly—think your daily $6 coffee or that $10 subscription you don’t use. Put that extra money directly into your savings account to increase your savings rate. If you cut back or remove the expense altogether, you’ll find the savings do add up.
Schedule Automatic Transfers
One of the most convenient paths toward wealth accumulation is to set up automatic savings. This will have you saving money without even thinking about it—assuming you have a budget in place and know both your expenses and savings goals.
Spend Money Intentionally
Try thinking about any purchase over $50, that isn’t a necessity, for a 24-hour grace period. Instead of buying an item on impulse, go home, and sleep on it. If you still want the item a day later and it makes sense in your budget, go ahead and purchase it. You’ll find that most of the time you don’t want the item as much as you thought you did. You’ve just avoided experiencing buyer’s remorse. Another way to decide on a purchase is to determine how many hours of work it will take you to afford it.
Build Up an Emergency Fund
One of the most important savings goals you should consider is building up an emergency fund. It’s nearly impossible to predict what is in store for you. Anything from an unforeseen illness, job loss, unexpected home or auto repairs, a financial emergency can occur suddenly and significantly impact your financial health and stability. If you start an emergency fund, you won’t have to worry if you’re prepared to handle them.
Say Goodbye to Your Credit Card
If you’re finding that you’re constantly tempted to overspend using credit, you should consider temporarily switching to a cash-only budget. While not always very convenient, this method is a great way to prevent yourself from overspending. It’s important to know how much you’re actually spending—as opposed to tapping a card and forgetting about the purchase almost immediately.
Southwest Recovery Supports You
The goal is simple: to become a mindful consumer instead of a mindless one. Not only can we help you clear debt, but we will also do it with a positive attitude that makes you feel respected. Give us a call today to start your journey to debt freedom.