Moving Forward Financially into the New Year

One of the few positive things to come out of the recession is that it’s forced people to take a long, hard look at their spending habits and keep tighter control over their finances.  Most families do have a certain amount of debt, with car, home, and education loans topping the list, but it’s important to keep your spending at a manageable level. Since there will be no money trees sprouting in our yards any time soon, we need to find better control over our finances.

Here are a few tips to follow in order to keep your financial well-being intact as you welcome in a new year:

Know what’s in your bank account(s). If you have no idea how much money you have, you have no idea how much you can spend.  If you have a bank account, you receive a statement each month, and with most financial institutions offering online banking, there’s no excuse not to know what’s in your bank accounts. Consolidate some of your accounts if it’s too difficult to keep track of them all. Read those statements and balance that checkbook every month to make sure the numbers work out.

Create budgets and stick to them. Once you know how much money you have, sit down and develop a budget. Factor in everything your family spends money on—not just the regular household expenses, but things like eating out, entertainment, gym memberships, and all of those other expenses that may not seem like much, but can quickly add up. Take a realistic look at each item and see what can be reduced or cut altogether. Ask for the kids’ input and make it a project so everyone understands how the family’s spending habits will change.

Don’t live off credit cards. One of the single worst things people do is pay expenses almost entirely with credit cards. Have a credit card for one or two big purchases and for emergencies, but don’t use it every time you make a purchase. Credit card interest rates show no mercy, so a small amount of debt can turn into a big problem in no time. 

Live at, or below, your means. “Bigger”, “better”, “faster”, and “more expensive” isn’t so trendy anymore.  “Practical”, “long-lasting”, and “affordable” are the buzzwords in this new economy. Look for second-hand or sales items, and shop around for deals.   

Pay bills on time. Carrying a balance is one of the easiest ways to accumulate debt. When developing a budget, factor in your household expenses first so your bill payments get top priority.