The start of a new year is the perfect time to review your finances and make changes to improve your financial outlook in 2016. These basic steps can help you visualize how to do better with saving, spending and long-term planning.
Credit card payments can take a big chunk out of your paycheck every month. Determine exactly how much you’re spending just to pay off cards and other types of debt, and develop a plan to take care of it in a reasonable amount of time. Start with the cards that have the highest rates, as these will only continue to get more expensive as interest compounds. If necessary, look into debt consolidation options to reduce monthly payments.
Getting rid of debt frees up more money to set aside for retirement, vacations and special purchases. Even a slight increase in what you put in your 401(k) or IRA every month can add up to a significant amount over time. Set new higher goals for monthly savings, and have the money taken out of your paycheck automatically, so that you’re not tempted to spend it on anything else. Make sure that at least some of it gets set aside in an emergency fund reserved to cover unexpected expenses.
It’s easy to save more when you identify and remove unnecessary expenses. Assess recurring payments for entertainment and other non-essentials, and decide if you use these services or products enough to bother to continue putting out money for them. Get in touch with your cable company and cell phone provider to ask about potential savings on the services that you do need. There may be a better deal available that you weren’t aware of, and you could wind up saving quite a bit on your current packages.
Swap messy file drawers for a streamlined financial management solution that allows you to visualize where money is coming in and going out. Software, apps, Excel spreadsheets and even old-fashioned handwritten ledgers are all useful methods for keeping track of your finances. Choose whatever tool works best for you, and update it regularly with income and expenses. Having a clear record reveals where you may be spending too much or if you’re staying on track. You’ll never have to wonder about where your last paycheck went or worry that you’re going to go over budget for the month. A reliable system also helps you maximize deductions and returns when tax time comes.
Working with a financial advisor or other professional who understands the intricacies of money management makes it easier to get started with your spending plan for the coming year. If you find that you need help, look for someone with a good reputation who will take the time to explain the details and keep you in the loop so that you can stay on track to meet your personal financial goals.
At Verdeja, De Armas & Trujillo, LLC, our team of Miami accountants is dedicated to providing personalized, financial guidance. We provide accurate and comprehensive financial statements as well as in-depth business analyses. Contact us today for a consultation!