As we enter the new year, it’s time to reflect back and think about how we want to do things differently. There are lots of ways to make positive changes for the upcoming year, but starting with foundational elements like personal finances can have a ripple effect across the rest of your life.
Let’s start off the new year in a great way by simplifying your finances with these helpful tips.
#1 Give Yourself Permission To Let Go Of Sunk Costs And Move Forward
You may have made some decisions that didn’t go as well as you thought they would, or started a hobby that instead of bringing you enjoyment, brought you an endless pit of expenses. In the new year, allow yourself to let go of those burdens and start fresh—focus on doing what feels right for you right now, even if it means starting from scratch.
It might sting a bit to take a brief loss on a project you started but don’t want to finish, but it’s better than allowing it to drain additional resources well into 2018.
#2 Automate Your Savings Plan
The best way to make sure you hit a savings rate goal is to automate the process of saving itself. If you earn consistent paychecks from a job or contract gig, set up an automatic transfer for your desired amount. That way, it will appear as though you have less to spend and make budgeting easier.
If you have a variable income from month to month, choose a percentage that you want to save and take that much out each time you receive a payment.
If you want to save 10% of your income, transfer out $100 if you get a check for $1,000 or $1,000 if you get a check for $10,000.
This way, your savings rate will stay consistent and scale with your income each month.
#3 Only Use One or Two Methods Of Spending
The best way to keep track of all your spending throughout the year is to consolidate where you have to keep track of it. If you have a credit card or two that you like to use for cashback or rewards, choose what kind of spending you’ll do on each one and stick to it throughout the year.
If you have a passion project or a side hustle, it’s really helpful to separate out those expenses from your personal ones as well. Keeping those purchases on a second card or checking account really gives you a up-to-the-minute look at how things are going.
Doing so helps you stay on top of your profitability and make sure you’re not overspending each month.
#4 Use An Aggregator To Get Everything In One Place
Of course, using a financial dashboard like Mint.com allows you to see everything in one place and efficiently track your spending, saving, and make sure you’re on track with your money goals all year long.
You won’t have to second-guess whether you’re staying on track with your goals, because all the information you need will be syndicated in one convenient place for you. It’s really hard to improve what you don’t track, so make sure to use a dashboard to keep everything under a watchful eye.
#5 Review And Assess Monthly Recurring Expenses
When repeated often, small expenses really do add up. Take a look at your spending over the last year and total up all of the monthly-billed services you had during that time. Add up the total spent and determine whether you feel that you got your money’s worth during that time.
See which recurring expenses you may be able to lessen or eliminate completely and automatically spend less each month. It’s easy for charges like these to get buried in credit card and banking statements, so take some time to make sure you’re not paying for anything you don’t want or need anymore.
Really, simplifying your finances is all about consolidating spending, tracking information, and letting go of sunk costs so that you can move forward with your life and make solid progress towards your financial goals this year. The less you have to think about it on a regular basis, the more you can focus on the other things you want to do every day.
Theresa Todman, Managing Partner/CEO of B&M Financial Management Services, LLC . Theresa works with small business owners and entrepreneurs to assist them with financial management and creating organized systems and procedures. She specializes in bookkeeping, accounting, QuickBooks solutions, small business tax issues and consulting.
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