While everyone intends to start off the new year on their best financial foot, sometimes that doesn’t happen. Whether you’ve taken on new debt, had a job-related setback, overspent or any number of other financial missteps, it doesn’t have to set the tone for the rest of the year. You can bounce back from a bad financial start with diligence and attention by following these simple tips.
Be Honest About Your Losses
The first place to start is to take a close and honest look at any losses you’ve accrued. Knowledge is definitely power in finances — if you don’t know the amount and cause of your setbacks, you can’t get ahead. If you’ve made a financial error in secret, as well, it’s time to bring your partner or family into the truth. Get your calculator out and figure out what you’re dealing with.
Get Back to Your Budget
Chances are that if you’ve gotten yourself into a financial pickle, you either stopped paying attention to your budget or you’re working without one. Now’s the time to bring budgeting back into your life and commit to staying within it. Chances are just setting fresh, clear guidelines for how you’re going to recover your losses and setting future spending will relieve some of the stress and anxiety that comes with financial missteps.
Spend Less Than You Earn
Once you’ve got your budget in place, you can feel resolved that your future finances will be better than your recent past. Budgeting allows you to find places to save money. In order to do that, you’ve got to commit to the obvious, however, and spend less than you earn. It’s easy to budget every last dollar you make, but to get ahead, you’ll have to free up some cash for eventual saving, debt repayment or emergency planning.
Look At Debt Repayment Plans
Many times, a poor financial start means you added debt to your life that you weren’t planning on. And debt typically comes with interest, which means you end up paying back a lot more than you initially went into debt for. Now might be the time to look into debt repayment plans. If your debt is quite high or you have multiple credit cards or loans, you might want to consider debt consolidation or a management plan. Do note that these plans can affect your credit score, however. If it’s just one debt source, but you’ve got high interest, you will want to consider making a higher than average payment to get that debt paid down quicker. Or at the very least, you may want to meet with a financial counselor who can help go over your finances to figure out the best option for you.
Whether you simply overspent or took on significant debt, at some point between budgeting and debt repayment you’ll want to start thinking about saving money. The key areas to save for are: retirement, emergency fund and third options might include a college savings plan for kids, a vacation fund or a holiday gift fund. Retirement should be a priority, because there will come a day when you either can’t work or don’t want to work anymore, and you need to be able to pay for your basic needs. You can use a retirement calculator to help you figure out how much money you’ll need to put away to meet the goal you set. An emergency fund is for more immediate needs, unexpected costs and possible job layoffs. If you’ve followed the steps in this article so far, you should be well on your way to figure out how to save for the future.