Are you just getting by, perhaps worrying about the next financial emergency that could put you behind?
Creating a financial plan for 2023 could help you get on the right page, giving you a clear plan of action to get into a better place in the coming year.
It’s not easy to do, and you may need to find a way to make extra money, but doing the work now could help you gain financial security for years to come.
Here are eight ways to make the biggest impact on your financial life.
Adjust your budget
Before anything else, you need to create some rules to follow. A budget provides a path for you to follow throughout the coming year, allowing you to minimize overspending but also keep your bills covered.
Creating a budget provides clarity on where you’re spending money and potential areas of opportunity to save.
When making your budget, aim to be as accurate as possible. That could mean creating a budget based on your monthly spending right now. Then, look for ways to trim your expenses. This isn’t a one-time event but an ongoing process to work toward each month.
Increase (or start) your emergency fund
One of the biggest fears for many is losing their job. One of the best ways to overcome this potential challenge is to set up an emergency fund.
Aim for three to six months of your monthly expenses and tuck it into an account that you can liquidate quickly if you need to, such as a traditional, no-fee savings account.
How will you do this? Go back to your budget and build a savings plan. After you determine how much you need to save, create a plan for building it up, even if you can only put $100 into the account each month right now.
Prioritize this fund as it creates a strong safety net you can rely on in emergencies, offering peace of mind.
Consider a side hustle or gig work
It may be time to look for a way to add some extra money to your life. The key is to be as open and flexible as possible to find work.
You may want to work in food delivery, pick up a few hours serving at a restaurant, or find an opportunity to work from home.
During your off hours, you could also babysit on the weekends or charge people to clean their homes or offices.
If you can make $100 a shift three times a week, that’s an extra $1,200 a month to add to your savings.
Get quotes on car insurance
Reevaluate your current costs. You can save a little here or there, but one way you may find big savings is to save money on car insurance.
Request a few quotes from insurance companies (you can do this fully online without having to deal with sales reps) and look for one that offers the same coverage at a lower rate. Make the switch.
It costs you nothing but could help you to reduce costs quickly. Are there other costs you can reduce, such as eating out, subscription services, or even your electric bill?
Pay down your debt
When you pay off debt, you not only reduce what you’re paying out each month, but you’re also saving yourself years of interest charges and financial frustration.
By paying down your debt, you can increase your available credit. If there is an emergency financial need, you have room on your cards to make ends meet if you have to do so.
Work to pay down the debt with the highest interest rate possible, putting as much toward it as possible each month until you pay it off. Then move on to the next debt with high interest.
The key here is to focus heavily on not using that credit again unless it’s an emergency.
Change jobs or ask for a promotion
Increasing your income is an important part of creating financial stability for some people. How do you do that, especially if a recession looms?
First, be sure you’re on the right career path for your interests and skill set, and consider applying to new positions to better meet your needs.
If you like your job, talk to your human resource manager about your successes with the company, how you are helping your boss to accomplish tasks, or other skills you bring to the table.
Sell yourself in a promotion pitch, asking for the ability to try to move up in the coming year.
Increase your investment contributions
Review your investment accounts to determine if you’re contributing enough to them, including your retirement accounts.
Are you getting the full match from your employer? Aim to put 10% to 15% of your income into these accounts to gain more financial security.
If you don’t have a retirement account, now may be the best time to get started, even if you can only contribute minimally.
Put more toward your mortgage principal
Once you’ve tackled unsecured and high-interest debt, work to pay down your mortgage by adding an extra payment applied to the principal.
Freeing up the amount of money you’re putting toward this long-term debt could help you to build your savings faster.
Do the same for car loans: Work to pay them off as soon as possible to reduce the amount of money you’re paying in interest each month.
At the heart of financial stability is consistency. Create your budget, start putting even a small amount into savings, contribute to your retirement account, and minimize spending.
Doing this month in and month out allows you to build strength. Not only is that great for your budget, but it’s also one of the best ways to avoid financial stress and feel financially secure.
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