5 TIPS FOR GETTING YOUR FINANCES IN ORDER

Spending money, saving money, and financial planning for your future.

A new year is upon us and with it, a chance to renew your resolve to live well, be healthy and strive to plan for your financial future. If you’re starting off the new decade with a list of resolutions, consider these 5 financial saving opportunities for getting your finances in order.

1. CREATE A BUDGET

To improve your financial health, it’s important to review the money you have coming in and going out. A budget helps you monitor your spending habits and tells you where money should go. A good rule of thumb is to use the 50/30/20 rule by spending 50% of your income on necessities, 30% on luxuries, and 20% on savings.

2. PLAN FOR THE UNEXPECTED

While there are many things in life that are out of our control, one simple way to relieve any financial stress is by saving for emergencies. If you're behind on your emergency savings, it's essential that you get a jump on the situation, as you never know when your next financial emergency could hit.

While it depends on your circumstances, it's recommended that you have enough cash on hand to cover three to six months of living expenses. With tax season quickly approaching, if the IRS owes you money, one of the smartest and easiest things you can do is to have that refund direct-deposited into your savings. No matter the amount, the extra funds will go a long way when you're coming in far behind.

3. AUTOMATE YOUR FINANCES

Eliminate the temptation to skip a contribution or use your savings for other purposes by automating your savings. Take advantage of automatic bill payments or renewal opportunities offered by your bank, an insurance provider or financial institution.

The risks of missing the bill can leave a mark on your credit and include interest, fees, being switched to a higher APR, or even having a service you rely on lapse. This doesn't just apply to your favorite streaming service, but more essential subscription services too. For example, you may not think about your in-vehicle safety and security system or your roadside assistance membership until you need it and that's when you hope it has been paid for. Automating these services can insure you never go without the protection or service you need.

4. IMPROVE YOUR CREDIT SCORE

Your credit score can impact many areas of your life and its importance can’t be overstated. The first step in improving your credit score is knowing what’s on your credit report. You are entitled to a free credit report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months.

Review all of your accounts and the total amount of debt you owe. Then make a plan, such as repaying your smallest credit balance or highest interest debt first. Remember increasing your credit score might not happen overnight. But by making positive changes and taking action over time, you can be well on your way to an excellent credit score.

5. SAVE FOR LONG-TERM GOALS

Sometimes getting caught up in your current financial situation can be an issue at the expense of your future financial goals. Setting long-term financial goals is an exciting way to give you direction and keep you disciplined. Establishing these savings goals can help you stay motivated and consistent when contributing to your long-term goals of retirement, buying a home or contributing to your savings account.

Writing down your goals and establishing strong money habits is the first step toward creating a financial plan that you can stick with in order to maintain consistent saving patterns, and to set yourself up for future financial success.

Personal finances can sometimes be confusing and stressful. By taking a proactive approach to improve your current financial situation and making a solid plan for all life’s expenses, you’ll be informed and prepared to make the right moves towards prosperity.