Many will see the new year as an opportunity to start with a new, clean slate. While you can never wipe out your past money woes, it is a great time to take charge and set the intention for what you’d like to achieve in 2019. Here are five easy ways to get started on your journey to financial stability.
1. Avoid Credit Cards and Payday Lenders
A credit card is not a security measure. This new year, let go of any preconceptions you have about holding on to credit cards ‘just in case.’ Likewise, payday lenders are a poor fail-safe measure, as their tremendous interest rates can trap the borrower into a cycle of debt that is difficult to break. If you encounter a financial emergency before setting up your ‘crisis savings’ opt for small cash loans from not-for-profit lenders. This way you can lock in low-interest rates on a smaller principal with flexible payment terms.
2. Know Your Living Expenses Before You Budget
The secret to a healthy budget is to calculate it around your living expenses rather than your income. Many people are unaware of the base cost of their monthly living expenses, which in turn, leads to an inflated budget and missed opportunities for savings. Add up your monthly rent or mortgage with Guardian Housing, your bills, and any necessary food, health or work-related costs; this is your basic living expense. When calculating your spending allowance within your budget, work from this number.
3. Re-negotiate Bills and Any Ongoing Expenses
The advantage of privatized utility providers and subscription services is the competition; you can always negotiate your rates. Don’t waste your time looking up each energy biller individually to find the market rates – use an online comparison tool. Note the competitor with the lowest offer and quote the details to your current provider. This way, you will always end up with a better deal as your provider should offer to beat or match the price, and if they can’t, you’ll be able to change over to the cheaper competitor.
A word of caution: switching to a cheaper service may not be worthwhile if it costs you a fortune in termination fees. Avoid contracts with exit fees and choose flexible or monthly plans where you can. Alternatively, take them into account during the comparison stage.
4. Establish Your Emergency Fund
It requires discipline and patience but designating savings for an emergency fund is worth the effort. After you’ve worked out your monthly living costs, use this number as a guide. Aim to accrue at least three months of your base living expenses, and you can always add to it later on. This safety net will give you greater peace of mind and help you to avoid borrowing money when unexpected expenses arise.
5. Set A Goal And Lock It In
Take some time in these early months to set your intention for the year. Think about a financial goal you wish to achieve. It could be a sum of money you wish to invest, the savings required to upgrade your car, home or devices, maybe it’s a family holiday or an experience you wish to afford at the end of the year. Using your real life goal is a great way to set your budget and keep up your motivation because it puts your aggressive saving techniques into perspective. It’s not an easy road ahead, but by dedicating some time towards each of these steps with your end-of-year goal in mind, you won’t just reclaim your sense of financial control, you will thrive!