Chances are you made a resolution to save more money in 2016, but how exactly are you planning on carrying that out? Without a plan of attack, it's easy to fall back into overspending in the new year, so we put together a list of seven small and easy mini-resolutions that will help you keep your financial goals on track.
1. Know your credit score
At the risk of sounding dramatic, I will admit that seeing my credit score for the first time was a game changer for me financially. My Chase Slate credit card allows me to get monthly FICO score updates for free and I finally took a peek and was surprised how motivational it was to see all of my financial stats on one page. You'll see exactly how many lines of credit you have ever had, open or closed, your student loans, credit utilization, and even what's making your score go up or down. Seeing all of this on one page was like a challenge for me. I wanted to see my stats go up. I started paying quite a bit more than the minimum on my credit card balances, I started paying attention to the amounts I was putting on my credit cards vs. the available credit limit. It was eye opening and if nothing else, being more aware of your current finances can help motivate you to make better financial decisions without even noticing you're doing it. If you do nothing more this year than learn where you currently stand financially, you've made a great first step.
2. Start contributing to your emergency fund monthly
If you don't currently have a savings account or some sort of emergency fund, make that one of your resolutions. Make it now and start contributing to it ASAP. The easiest way for me was to start a savings account with my current bank and set up an automatic deposit out of my paychecks each month. You could start with just $25 each paycheck ($50 per month is my bank's minimum to have a savings account). All of your paycheck goes into your checking account, but $25 of it slides right into savings, no work needed on your part. As time goes on and you feel as though you've gotten even more control over your finances, you may be able to increase it to $100 each paycheck. The key here is to start with an amount you won't miss. Start small and increase the amount you contribute only if you can. If you try to do too much at once, you'll end up feeling broke and won't stick to it. Ask your bank the lowest amount you can deposit monthly and start there. You'll start to see your savings grow without feeling like you're missing cash from your everyday account. The key here is to increase it when you feel you are able and really start building the emergency fund so it can actually help you when you need it to.
3. Choose one thing to pay off in 2016
Pick one source of debt in 2016 and resolve to make it disappear by Christmas. If you have student loans and credit cards, always choose to pay off the credit cards first. Most student loans have tolerable interest rates, while credit card interest can truly be debilitating when ti comes to paying off debt. You'll want to get the credit card with the highest interest rate paid off ASAP for the biggest payoff. Make payments larger than the minimum and keep chipping away at it. But, let's say the card that has the highest interest rate also has a higher balance and you really want to pay off the card with a teeny tiny balance and be done with it. Do it. As much information as you can find about paying off debt, the best way to pay it off is to just do it. It might feel like you're not making progress, but you are. Keep chipping away at it and don't get discouraged.
4. Read One Personal Finance Book This Year
I can't stress enough that the first step towards becoming financially secure is being financially aware. I went through my college days being blissfully oblivious to how hard it would be to dig my way out after I graduated. Once I finally took that first step of looking at my credit score and understanding my finances, I was able to start making some very smart decisions with my money (tooting my own horn, here. I deserve it!) At least some of you have probably resolved to read more in 2016, and I challenge you to pick up a finance book. Nothing crazy, just something to get your feet wet. Brad wrote a great book called 'Do More, Spend Less' that teaches you how to be a smart, savvy consumer and have control over your finances and it's a great place to start. Not sure which book is right for you? Browse the personal finance best sellers on Amazon and choose the one that makes you nod your head in real life and think, "I need this in my life."
5. Cancel your cable
We've talked a lot about canceling your cable. Becky did it 8 months ago and I just canceled mine 2 months ago and I'm saving $152 a month! Let's say you just can't see yourself canceling cable or you're getting it for less because of your internet or the many other reasons this just may not work for you, that's okay! Cancel something else. Take a good hard look at your monthly bills and remove something(s) that you can do without. Before we cut cable, we cut out the mailed discs in our Netflix subscription and just stuck with streaming. Take a look at how much you spend on going out for lunch each month or a magazine subscription. The key here is to cut frivolous things that you may not miss. Don't ban yourself from things you can't do without, because you'll end up cheating and feeling guilty. Find the things you know you can do with out and take the plunge.
6. Download a budgeting app (and use it!)
Along with Resolution 1, this has to do with being financially mindful. Don't start by trying to dramatically cut your spending on everything, start by getting organized and taking a deep look into what you spend your money on and then look into why. One of the most popular free options we like here at Brad's Deals is Mint.com and it's great for taking a look at what and how you spend. You can automatically sync your accounts to monitor your finances and your monthly spending. Once you have a firm grasp on your spending, it's time to consider where to cut and where to give yourself limits. Apps like Mvelopes or Good Budget to start limiting your spending each month. Read our post listing our favorite budgeting apps for more information.
7. Keep Your Credit Card Balance at $0
We love credit cards here at Brad's Deals. The perks and rewards with some credit cards are invaluable. However, if you've got a balance on your credit cards, take a quick look at the interest rates. Insane, right? If you keep a balance on your credit cards, you can end up paying thousands of dollars extra. I know that's common knowledge, but truly think about it. Thousands of dollars more than what you initially spent is just gone. Your best bet is to take advantage of the perks, while still keeping a $0 balance on your card. Treat your cards like a debit card and only spend what you can afford to cover with your bank account. Use your credit cards wisely, earn points, keep your credit score high, but always repay what you owe each month to avoid the interest charges.
For those debt sources you know you just can't pay off in 2016, try to make the burden a little more bearable. Ask your credit card company for a credit card rate reduction. Or see if your student loan offers interest reduction if you set up automatic payments. Easier still, you could try this silly (but effective!) trick I've been using: I'll see an item I want to buy, say it's boots for $60. Just as I'm about to hit submit on my order, I stop myself. I make myself wait 24 hours and the next day if I feel like I can live without the boots, I take that $60 that I was obviously more than ready to part with and put it towards a bill or into my savings account. It sounds ridiculous, but when you turn down a $60 order at Nordstrom and can add a little extra to your credit card payment that month, you're few more dollars closer to debt free and sometimes that feels better than even the softest new sweater.
Remember to start small, never get discouraged, and set goals that are attainable to you personally. Here's to a fun and debt free 2016!
This article first appeared on Brad's Deals.