The New Year is finally here, and for many people, that means they’ve made their New Year’s resolutions. One of the most popular areas to focus on changing in the New Year is to get better control over our current and future finances. While there are guides that can help you learn everything you need to know about sticking to a budget, there are also key areas that you can focus on, and most people can trim back. Keep reading for the best budget considerations to take into account this new year, so you can experience less worry and more freedom and make this the best year yet.
Eating Out, is it Worth it?
When most people look at their finances at the end of the year, they realize that one of the biggest areas where they bled money was food. Of course, food is necessary to live, but eating out several times a week isn’t. This year, consider brewing your coffee at home instead of ordering it to go several days a week. Cooking at home is not only more budget-friendly, but it’s also healthier. Having control over the ingredients in your food means that you can ensure you and your family are eating the highest quality, freshest, and most nutritious foods, as opposed to food in a commercial restaurant. Save money and live healthier by opting to eat out less.
While the general rule of thumb regarding how much of your income should you spend on rent is 30% of your gross income, many people overestimate their ability to go higher. Budget woes are more severe in people who spend too much money on rent. This year, either consider shopping for a more affordable rental or taking on a roommate to make your rent more budget-friendly.
Closet Clean Out
These days with fast-fashion marketing to us at every turn, apps that make payment installations a breeze to buy the latest and greatest clothes, and influencers on our social media telling us what we need, chances are, you’re spending way too much money on clothing. Did you know the average person wears less than 20% of their wardrobe? That is an incredibly low amount! Commit to a no-spend challenge, or limit a tiny fraction of your budget to clothing this year, and you’ll be amazed at how much money you save. Additionally, opt to sell clothing you no longer wear on apps like Poshmark or Depop to make extra income to pad your rainy day fund.
Rainy Day Fund
Your emergency fund is one of the most important areas you should be budgeting for in the new year. When surveyed, most Americans report they wouldn’t be able to make ends meet with one missed paycheck. While this statistic may not alarm you, let it motivate you. Look at every area of your budget to see where you can save and start there. Setting aside five dollars a week towards a savings fund can be fulfilling as you watch your rainy day fund grow. As you practice the habit of saving, you will get better and be able to save more. If you have the funds to meet with a financial planner, they can be life-changing and set you up for serious saving success.
Focusing on how much you spend on transportation is essential in the new year. Are you driving a car you can’t afford? Is your insurance too high? While everyone needs a way to get from point A to point B, you may be focused more on style than financial comfort. Consider trading in your current vehicle for something more affordable in monthly payments as well as gas costs. You should also shop around and compare insurance rates to ensure you’re getting the best possible rates based on your driving history and credit.
While there are other areas of your budget to consider this new year, from utilities like your cell phone and internet plan to medical, healthcare, and debt payments, the above considerations are essential. This year you can make your financial dreams come true by applying research and commitment. Here’s to your financial health!