Holiday shopping is behind you, the eggnog has officially worn off and the seasonal coffee drinks have lost their allure. A new year has begun and it’s time to get your finances in order.
“As you gear up for a new year, it’s important to take a hard look at your finances and decide what financial habits you should carry into 2021 and which ones you need to kick to the curb,” says Jaspreet Chawla, senior vice president of savings products for Navy Federal Credit Union.
1. Don’t ignore your debt.
Tackling debt can be intimidating, but also can’t be ignored. Make a game plan to strengthen your financial situation and get yourself back on track. For example, set a deadline for yourself and figure out exactly how much money you can put toward your debt on a regular basis to meet that deadline.
If you have more than one credit card or other loans, you may be able to consolidate those debts into one payment at a lower interest rate. This helps simplify everything by giving you one payment each month instead of multiple payments and due dates. Talk to your trusted financial institution to see what options are available to you.
2. Keep your emergency fund top-of-mind.
You don’t want to be left scrambling if your car breaks down, if your home needs repairs or if you lose your job. COVID-19 has taught us how important it is to be prepared for the unexpected. It can be daunting to know where to begin, especially if you don’t have a fund to cover emergencies yet.
First, start small. Try putting a set amount each month into a savings account specifically for emergencies and make transfers into this account automatic. If you already have an emergency fund, consider increasing your contributions or exploring other tools to diversify your savings portfolio. In the event you need to tap into your emergency fund, it’s important to focus on rebuilding it as soon as you can.
3. Differentiate “needs” from “wants” in your budget.
It’s a good idea to identify “needs” versus “wants” to eliminate unnecessary expenses. Do you have to have the extra streaming service or weekly manicure? What about frequent take-out meals or the daily trip to your favorite coffee shop? A few simple, mindful lifestyle changes now can make your dollar go a lot farther in the long run. You might be surprised how much of a difference it’ll make.
4. Take advantage of a mix of savings tools.
Your future self will thank you! From basic savings accounts to certificates to money market accounts and beyond, you have many options to make your money really work for you. Also, explore digital savings tools like mobile apps to help support your short- and long-term financial wellness.
Changing just a few habits can really make a positive impact on your financial future. These tips can help pave the way for a more financially fit year ahead.