Managing your money helps provide stability for your family. Maybe it was even your New Year’s resolution. So, here are twelve ways to get your finances in order this year.
1. Manage Your Overspending
We often want the latest item based on media influences. However, this leads to impulse purchases. To help reduce your overspending, create a budget.
Follow these tips to get started:
- Gather your financial documents
- Calculate your income
- Create a list of all your monthly expenses
- Total your income and expenses
- Make adjustments to your budget as needed
Use an excel spreadsheet to stay organized. Make sure you take into account variable expenses, such as birthday gifts. Once you’ve determined your budget try to stick with it.
2. Write Your Will
This document ensures your finances are taken care of after you pass away. If you have younger children, it also allows you to formally name their legal guardian. When creating your will, determine which type you want.
There are different kinds, such as simple or last will and testament. The next step is deciding what assets to include, such as property or bank accounts. Then determine who will receive which assets and who will carry out your wishes.
3. Be Aware of Inflation
High inflation rates raise the costs of essential items like gas or food. In addition, interest rates sometimes start to increase. In November of 2021, the annual inflation rate accelerated to 6.8%. ??To protect your savings, research how inflation works and what you can do to fight it. Try adjusting your investment portfolio or asking for a raise.
4. Get Ready for Major Life Events
Life events like marriage or having kids, come with added expenses. When planning for a wedding, there are many costs to cover from the venue to the entertainment. Also, consider drafting a prenuptial agreement to protect your assets. When you have a kid, you’ll need to pay for child care and save up for college. In addition, figure out your options for paid family leave and get your estate documents in order.
5. Create a Retirement Savings Account
Saving for retirement allows you to live more comfortably as you age. In fact, you should save about 10%-15% of your income for retirement. You might have an account set up through work or one you made on your own. There are multiple plans available, such as a 401 (K) or SEP IRA. Make a goal for how much you want to save each year and regularly check on your progress.
6. Cut Out Unnecessary Expenses
Consider the things you frequently spend money on. Some of them might be costing you more in the long run. Try cooking at home more often to lower dining expenses. With the influx of streaming services, consider cutting your cable package. Plus, get rid of any unused magazine or gym subscriptions.
7. Prepare for Tax Season
Staying on top of your taxes is essential to avoid late fees. So, know when your taxes are due. For example, the tax due date for February is by the 15th. Also, research what tax bracket you’re in and any recent changes to the system. To determine your tariff rate, divide your filing status by your taxable income. Plus, if you work remotely there may be additional tax implications.
8. Set Up a 529 Saving Plan
Educational costs for your children can be expensive. The average cost for a four-year public school is $9,410. A 529 plan helps pay for expenses, such as tuition, fees and room and board. It covers K-12 educational funds as well. There are multiple plans to choose from including savings and prepaid tuition plans. The good news is a 529 account is exempt from federal and income taxes.
9. Repay Your Debts
Repaying your debts relieves some of your financial stress. Start by paying off your credit card debt or your most expensive loan. You can also make small payments on a variety of debts. Create a budget to help manage your debt more efficiently. In addition, pay more than the minimum and automate your bill payments.
10. Build an Emergency Fund
An emergency fund prepares you for any unexpected expenses, such as job loss. This way you can focus on your next steps instead of scrambling to secure cash. Therefore, you should put away at least three to six months of living expenses. To create your fund, determine how much you spend each month. Use the money you would have spent on entertainment to add to your fund. In addition, save any raises or bonuses you receive.
11. Expand Your Income
Having some extra cash gives you more financial flexibility. Start by asking your boss for a raise. Explain why you’re an asset to the team and present data to back it up.
You could start a side hustle as well. For example, you could deliver food, sell items on eBay, or walk your neighbor’s dog. There are multiple websites, like Upwork, that offer freelancing opportunities. Another tip is renting out part of your home to earn passive income.
12. Switch to Credit Cards That Offer Rewards
Look for credit cards that offer rewards or cashback. Do some research to find the best ones for you. When choosing a card, consider which rewards are most valuable to you. Suppose you like to eat out. Pick a card that offers rewards to restaurants or supermarkets. Remember to check if there are any hidden fees.
How to Manage Your Finances
Dealing with your finances can feel overwhelming. But there are simple ways you can stay on top of them. Follow these tips to get your funds in order this year.
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