18 Ways to Improve Your Finances This Year

Even if you’re good with money, there’s always room for improvement. Good money management skills are crucial when trying to stick with a budget and avoid credit card debt. But being a good money manager isn’t only about spending within your budget. Whether you’re financially savvy, or you’re just starting to get serious about your money, here are 18 practical ways to improve your finances this year.

Start saving an emergency fund

Ideally, every person should have a 3 to 6 month emergency fund. Cash in this account can sustain you after a job loss, and cover unexpected expenses that arise. Get into a habit of paying yourself first and save at least 10% of your income every month.

Become a discount shopper

It doesn’t matter whether you’re buying groceries or clothes, only shop when you have a coupon, or when an item is on sale. You’ll reap the most savings, plus you’ll get more bang for your buck. Subscribe to Sunday’s newspaper, or sign up to receive promotions and coupons from your favorite retailers.

Start budgeting

Are you always broke at the end of the month? Maybe the problem isn’t too little income, rather the fact that you’re not budgeting for the month. Creating a spending plan is one of the easiest ways to assess where your money goes, plus it can keep your spending within a certain limit.

Pay off debt

Whether it’s credit card debt or loans, develop a strategy to pay down your balances. Reducing debt can provide peace of mind, create disposable income, plus increase your FICO credit score. Pay more than your minimums, negotiate a better interest rate, and stop adding new debt.

Increase your credit score

“Your credit score is a key factor in determining interest rates you pay for auto loans mortgages and credit cards,” says Lexington Law. Therefore, maintaining a good score should be a priority. Always pay your bills on time, pay down debt, diversify your credit and limit your number of credit applications.

Increase retirement contributions

How much are you currently contributing to your retirement accounts? Is it 2% of your income, or perhaps 3%? If possible, aim to increase your contributions this year to 5% or 6%. This gives your account a boost, which can help secure a comfortable retirement. Also, diversify and look into starting an individual retirement account.

Consider a credit union

Yes, you must be eligible for membership at a credit union. But if you meet the qualifications, joining a credit union can result in better interest rates on savings and checking accounts, plus lower rates on auto loans and mortgage loans.

Invest in yourself professionally

If you fill stuck at a dead end job, invest in yourself this year. Look into getting an advanced degree, or take a class or workshop to brush up on your skills and learn new ones. Doing so can open the door to better job opportunities and a higher salary.

Ask for a raise

Obviously, you should only request a raise if you’re justified. Therefore, research your worth online using sites such as payscale.com. And when approaching your boss, be prepared to explain yourself. Keep a record of your accomplishments or achievements. Sometimes, you have to sell yourself to earn a higher income.

Generate extra cash

Even if you work full time, consider getting a second income source. Maybe you can freelance or work as a consultant. Extra income can help reach financial goals, such as paying off debt, saving up to buy a house or building an emergency cushion.

Learn how to cook

Be honest, how much do you spend dining out every week —whether it’s for dinner or lunch. Learning how to prepare your own meals can save money. It typically costs less to purchase ingredients and prepare meals yourself, and with leftovers, meals can lasts for two days or longer.

Compare insurance policies

You might be comfortable with your present insurance policies. However, if you haven’t shopped for policies in a while, you might be paying more than necessary. Whether it’s your auto insurance or a homeowner’s insurance policy, shop around and compare rates to see where you can save.

Protect your identity

Never ignore your personal identity. Once a year, order your credit report from annualcreditreport.com. Carefully read the report and dispute any erroneous information. Also, consider signing up for credit monitoring services. For as little as $10-$15 a month, the company will send an alert if someone opens an account in your name.

Teach your kids about money

Rather than wait until your children are teenagers or young adults to teach money management, start early. Give your kids a small allowance, and then stress the importance of saving a little, spending a little and donating a little.

Get a financial planner

You don’t have to be wealthy to have a financial planner by your side. These professionals can offer advice on various areas in your financial life from purchasing life insurance to planning for retirement.

Refinance your mortgage

If your mortgage rate is more than today’s average home loan rates, consider refinancing to lower your monthly payment. Use the savings each month to pay off debt or boost your savings account.

Downsize

Do you have difficulty paying your mortgage or auto loan payment? Rather than keep expensive debt to save face, stop worrying about others and do what’s best for your money. Downsizing and moving into a smaller, cheaper place, or trading in your car for a cheaper one can improve your cash flow and help you reach financial goals.

Learn financial patience

Whether you want to take a vacation or buy a new flatscreen television, stop pulling out credit cards for instant gratification. Learn financial patience and save up for large purchases. There’s a certain measure of satisfaction that comes from knowing you own an item outright.

Final Word

This is your money, and it’s your responsibility to use it wisely. We aren’t born with money management skills; but through personal education, it’s possible to make decisions that can improve our financial future.

Image Credit