Money management in the New Year

Even a small amount saved every month can add up to thousands over the years

13:45 December 30, 2017

Monday is the beginning of a new year. And although new beginnings don’t bring change by themselves, they fire up your motivation to do better, in all aspects of life including money management.

But we all know that New Year resolutions are often short-lived. So what can you to make sure that your commitment to financial well-being will be sustained through the whole year? Here are four simple steps to give your money and budget a quick makeover.

Set a target date to pay off debt

Have you got in the habit of carrying over balances on your credit cards? Make it a goal to pay it off this year. To do so you must make sure that you trim your expenses enough to come up with a monthly payment.

Committing to channelling a certain amount of money into paying off your credit card balances should help you keep your spending down. In addition, you will have to make sacrifices in terms of not adding any major new purchases until this debt is fully paid. Once you’re back to zero, you should have an understanding of what living within your means entails. So do your best not to use credit cards to pay for anything that is beyond your means and avoid getting back into the same situation again.

Increase your savings

How do you save? If you have been channelling part of your pay cheque to a separate account, review this amount and decide how much you can increase it. If you don’t have any such set-up, get it done right away. Even a small amount saved every month can add up to thousands over the years. You are unlikely to even feel the difference every month, but you certainly will notice the growing amount that can be a great source of relief in case of an emergency.

Make sure these savings are not at your disposal. For example, don’t consider part of the money in your payroll account as savings. If you have saved a good amount of money, consider transferring it to a certificate of deposit or several certificates. Keep adding to your savings regularly, if possible.

Mark big-spending events

Marking the big events of the year on the calendar and assigning them budgets is a great way to make sure you don’t overspend. For example, will you be going on a couple of vacations? Attending a relative wedding overseas? Are you expecting a baby? Put down the dates — and budgets — for these expected events.

By doing so now, you will be able to know if you can afford any additional costly adventures or not. So when you get your hands on a cruise flyer or you see a fantastic living-room set on sale, you would be able to decide quickly whether you can afford it or not.

In addition, knowing that big spending events are approaching can help you save some money in advance — instead of paying for them using your credit cards.

Commit to good habits

Being responsible and accountable is the first step to financial well-being. So take this new year beginning as an opportunity to hold yourself to good habits. You probably know what you do to waste money. Pick a habit or two and eliminate them from your routine right away. This could be anything from your over-priced morning coffee to frequent, unnecessary online shopping.

This should be an immediate step to take, and begin tracking your success. That is why pick that is measurable, even if you look through your past bank statements to see what you could trim. This sense of empowerment to make change in your financial landscape should help you stay motivated when you’re taking steps toward other goals. It is simply a sign that your efforts are paying off.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.

Make a change today

Set a date to pay off debt

Add a little more savings

Note big spending events

Be committed to good habits