The holiday season can have a negative impact on your bank balance. It can also make matters worse if you have many bills and debts to repay throughout the year, as you might be concerned about how you’ll financially recover from the season.
If you find you are constantly worried about money and would like to enjoy more financial freedom next year, find out how to overhaul your finances in 2019.
Open a Savings Account
Boosting your savings is the best way to free up your finances. However, research has found that two-thirds of Americans would struggle to find $1000 in an emergency.
If you fall into this category, it is essential to open a savings account to build up a rainy day fund, so you’ll have the cash to spare should your car break down, or you receive an unexpected bill.
Avoid Financial Infidelity
According to the National Endowment for Financial Education, 2 out of 5 couples are reportedly guilty of financial infidelity. Sadly, this can place significant pressure on a couple’s finances and potentially their relationship.
If you or your partner hide money or expenditure from each other, you must develop a more honest and open attitude towards your finances, so you can both stick to a set budget and reach your financial goals.
Secure Your Family’s Financial Future
Many people often consider the here and now when it comes to their finances and fail to plan for their future effectively. However, it is vital for your loved ones’ security to think ahead, so they’ll never struggle financially.
For example, if you have yet to do so, invest in guaranteed issue life insurance to ensure your family could pay for your funeral and outstanding debts should you pass away. It will provide peace of mind that your loved ones will be protected.
A National Financial Capability Study found that one-third of Americans only pay the minimum amount on a credit card every month. Consequently, they will pay more interest on the balance each month, which can quickly drain their cashflow throughout the years. If you have a credit card or a loan, consider overpaying to lower the interest rate and eliminate the debt as soon as possible.
Improve Your Financial Literacy
Financial knowledge is power, as it allows you to make smarter decisions with your outgoings, savings, and insurance options. Unfortunately, many people of all ages are not financially literate.
For example, just 24% of millennials in the US have demonstrated basic financial literacy. It’s therefore essential to educate yourself on interest rates, poor spending habits, and saving options to improve your cashflow and reduce both good and bad debt.
Create a Budget
A monthly budget will help you to remain on track, so you can pay your bills on time, deposit money into a savings account and avoid late payment fees. Create the budget in an Excel spreadsheet, so you can quickly and easily track your finances.
Identify your projected income and fixed expenses for the month, which will ensure you are not spending more money than you earn. Next, consider any one-time expenses, such as a loved one’s birthday or a home improvement bill, which you must add to your budget for the month.