Start the new year with a new financial outlook and get off to the best start possible.
The new year is typically a time of optimism and a new start. And it should be. It’s the perfect opportunity to start afresh, right any wrongs of the last year and put our best foot forward.
This post aims to help with that.
I’m going to share some simple tips to help start the new year on a sound financial footing.
I’ll share techniques to help you spend less, save more and get a little more value from your spend.
New year, new financial habits
Times are still tough, we still have sky-high bills and inflation is still biting into our everyday expenses. All the more reason to get control of our finances and do whatever we can to survive.
Follow some or all of these tips to make your money go a little further.
- Set financial goals for the year: What do you want to achieve with your money in the new year? Do you want to pay off debt, save for a down payment on a house, or invest for retirement? Once you know what your goals are, you can make a plan to reach them.
- Create a budget: This is the most important step in managing your money and avoiding debt. A budget will help you track your income and expenses so you can make sure you’re spending less than you earn. There are many different budgeting methods out there, so find one that works for you and stick to it.
- Track your spending: Keep a close eye on where your money goes. Use apps or old-fashioned pen and paper to track every expense. This will help you identify areas where you can cut back.
- Pay off high-interest debt first: If you have credit card debt or other high-interest debt, focus on paying that off as quickly as possible. This will save you money in the long run.
- Prioritize essential bills: Make sure you pay your essential bills first, such as rent or mortgage, utilities, and groceries. These should always be the top priority.
- Make more than the minimum payment on your debts: If you only make the minimum payment on your debts, it will take you much longer to pay them off and you’ll end up paying more interest. Try to make more than the minimum payment whenever possible.
- Avoid taking on new debt: If you can help it, avoid taking on new debt in the new year. This includes credit card debt, car loans, and personal loans. If you do need to borrow money, make sure you shop around for the best rates.
- Cut back on unnecessary expenses: Take a close look at your budget and see where you can cut back on unnecessary expenses. This could include things like eating out less, cancelling unused subscriptions, or shopping around for cheaper insurance.
- Increase your income: If you can, try to increase your income in the new year. This could mean getting a raise at your current job, starting a side hustle, or finding a part-time job.
- Automate your finances: This is one of the best ways to stay on track with your budget and avoid debt. Set up direct debits to your savings account and for bill payments. This way, you’ll never forget to make a payment and you’ll be able to save money without even having to think about it.
- Set up an emergency fund: Ideally, you should have an emergency fund with at least three to six months’ worth of living expenses. This can prevent you from going into debt when unexpected expenses arise. Yes it is a big ask, but you’ll sleep much easier at night if you have it!
- Avoid impulse purchases: Before buying something that isn’t essential, give yourself a cooling-off period. Ask if it’s something you truly need or just want in the moment. Use the 24 or 48 hour rule.
- Use cash or debit cards: Consider using cash or debit cards for everyday purchases instead of credit cards. This limits your ability to spend money you don’t have.
- Limit credit card use: If you do use credit cards, set a limit for yourself and pay off the balance in full each month to avoid accumulating interest.
- Shop smart: Look for discounts, coupons, and sales when making purchases. Consider buying generic brands and comparing prices before making big buys.
- Cut unnecessary expenses: Review your monthly expenses and identify areas where you can cut back. This might mean or dining out less often or buying fewer clothes.
- Plan for special occasions: Save for special occasions like birthdays and holidays throughout the year so you don’t have to get into debt when the time comes.
- Get help if you need it: If you’re struggling to manage debt on your own, there are many resources available to help you. You can talk to a financial advisor or credit counsellor or enrol in a debt management program.
- Don’t give up: It takes time and effort to get out of debt, but it’s worth it in the long run. Don’t give up if you have setbacks along the way. Just keep working at it and you’ll eventually reach your financial goals.
Here are some additional tips for avoiding debt:
- Beware of impulse purchases: When you’re shopping only buy the things you need. Avoid buying things on a whim, especially if you can’t afford them.
- Wait 24 hours before making a major purchase: This will give you time to think about whether you really need the item and whether you can afford it.
- Don’t use credit cards to pay for everyday expenses: Credit cards should only be used for emergencies or large purchases that you can afford to pay off in full within a few months.
- Be careful about using buy now, pay later services: These services can make it easy to overspend, especially if you’re not careful.
- Talk to your family about your financial goals: Let them know that you’re trying to avoid debt and ask for their support. Sharing a goal makes it harder to give up on it.
I know lists like these make saving money sound easy but this is the only accessible way I know of to communicate these things.
I fully appreciate life and managing money is anything but easy. I know saving 3 or 6 months’ worth of bills may seem impossible.
But I also know it’s possible for someone on a low wage as I have done it myself. In my opinion, the feeling of security having savings provides is worth every single sacrifice it took to get there!
Nothing beats a good night’s sleep where you’re not worrying about bills!
