There is much weighing on our minds as we head into this new year – a possible recession, more interest rate hikes, increased unemployment, and rising prices. But it’s not all doom and gloom! Here’s the good news: There are steps you can take to get your money right in 2023. Interested? Read on and find out what you need to do!
Revamp Your Budget
A budget is the best tool you have to keep money in check. Despite this, many people never create one or fail to stick with it when they do. If you’re ready to get your finances on track and start saving more money than ever before, then it’s time to create a budget that works for you!
- The first step to creating a budget is making sure that it’s realistic and flexible enough to fit into your everyday life without causing stress. Start by listing out all of your monthly expenses—from rent or mortgage payments all the way down to small bills like phone service. We recommend using a spreadsheet like Excel or Google Sheets so that they’re easy to sort through later on down the line.
- Next comes creating categories such as “rent” items versus “food,” which will help keep things organized.
- Compare the total cost of your expenses to how much income you bring in each month. This will give you a better understanding of your cash flow and what changes need to be made.
- Finally, try to set aside some extra cash each month for an emergency fund to cover unexpected expenses like car repairs or medical bills; this ensures that your budget can run smoothly even if something goes wrong unexpectedly! We’ll dive deeper into how to best create your emergency fund next!
Build an Emergency Fund
The next step on your journey to financial success is to build an emergency fund so you can be ready for any financial surprises. . An emergency fund is money that should be set aside in case of any unexpected expenses, such as a car repair or medical bills or a temporary loss of income.
- If you want to keep your money safe and secure, put it into a high-yield saving account that’s protected by FDIC insurance. You’ll earn more interest than if you were to keep your cash in your checking account or make non-interest-bearing investments like CDs, bonds, and stocks (although these can provide returns as well).
- As for how much money you should set aside for emergencies? It varies and depends on the type of emergency that occurs, from a simple car repair to loss of a job. No matter what situation arises, having at least six months’ worth of typical living expenses saved up will protect against any unexpected costs down the line.
Pay Down Your Debt
The final step of getting your money right is to pay off your debt! By getting rid of your debt, you can save thousands of dollars in interest payments over time. To start, it’s important to prioritize your debts according to their interest rate and monthly payment.
- The debt with the highest interest rate should be paid off first, no matter what it is. This could be a credit card or mortgage with an APR (annual percentage rate) above 10%.
- The next step is to take a good look at your budget and figure out how much money you can set aside each month for debt repayment.
- If you have several credit cards with high interest rates, consider consolidating them into one personal loan with a lower rate. This can help reduce the number of payments you need to make and manage each month and help you build up your savings faster, since you’ll have saving money on interest.
Reevaluate Your Retirement Accounts
If you haven’t started thinking about your retirement funds yet, it’s never too early to start. As the market has been volatile recently, consider putting your money into a safe investment until it stabilizes. This way, you’ll be able to protect yourself from any losses while still keeping an eye on the market.
- If you have a 401(k) or 403(b), consider transferring the money to an IRA and investing it in low-risk options. This will help you keep your money safe while still getting returns on it.
- Consider high-yield savings accounts which offer higher interest rates than regular bank accounts, but the returns are lower than those offered by certificates of deposit. In exchange for the lower returns, you’ll have easier access to your money.
There are ways to improve your financial standing this year, but you must take action.
The key to financial security is learning how to manage your finances in a way that allows you to live the life you want and plan for the future without worrying about how soon your next paycheck will come in. It’s important to be willing to take the incremental steps above that will pay off in the long run..
If a personal loan is part of your financial plan for this year, Credit Direct can help you find the right offer. Check rates in minutes with no effect to credit score here.