The New Year is the perfect time to start fresh and make positive changes. So, if you’re hoping to make some positive changes with your finances, you should take on these practical money habits this year:
1. Start a Budget
Have you been living without a budget? That needs to change! You should take this as a sign to organize your personal finances using this practical financial guide as soon as possible.
Why? A personal budget brings a lot of benefits to the table. Here are some of the things that it can help you with:
- Tracking your monthly expenses
- Detecting spending patterns and bad habits
- Finding opportunities to cut costs
- Achieving savings goals
- Reducing financial stress
2. Prepare for Emergencies
You don’t want to get caught by surprise when you suddenly have an urgent expense that’s well outside of your budget. Think about it. What will you do if your car stalls and you need to bring it to a mechanic? What will you do if your refrigerator stops working and you need a replacement? What if you break a tooth and need to rush to the dentist? All of these problems can’t wait. You’ll need to address them right away.
To prepare for these stressful moments, you should start building up an emergency fund. Look at your budget to see how much you can afford to set aside every month into a separate savings account. Then, add that amount every month. By the end of the year, you should have a strong safety net to rely on.
What if you need to use it earlier? If an emergency expense crops up when you don’t have enough savings in your fund, you still have some options to pay for it. You could try to get a personal loan. Click here to see what type of loans are available in your home state and see what qualifications you need to apply. You just might be eligible to send in an application.
If you’re approved, you could use the borrowed funds to handle the emergency quickly and then manage a steady repayment plan later.
Another option for dealing with the emergency is to put the charge onto your credit card. You should only do this when your balance is nowhere close to the limit.
3. Pay Your Bills on Time
Paying your bills on time is a practical financial habit that you should always follow. First, paying on time will protect you from late fees and penalties. Depending on the creditor account, your late payments could lead to service cut-offs or asset forfeiture. You don’t want to risk these consequences.
Second, bill payments can affect your credit score —which can, in turn, affect your ability to borrow funds in the future. Paying your bills on time should have a positive impact on your score, and paying them late on a regular basis is going to have the opposite effect.
How do you pay your bills on time? If you have trouble remembering these deadlines, automate your bill payments through your online banking. That way, when the deadlines finally arrive, the amounts are automatically removed from your account and given to the creditor. You don’t even have to think twice about it.
Change your finances for the better! Take on these practical habits and see what a difference they make in your life.