Chances are, you started the year off with a few financial goals. Maybe you wanted to save a certain amount of money or pay down debt. Regardless of what it was, how is it going? If you’ve fallen off track or haven’t even started, don’t worry. There’s still time. This article shares five ways to help you boost your finances before 2022 comes to an end:
1. Apply for a Secured Credit Card
How’s your credit score? If it’s on the lower end, you should focus some of your energy on improving it. Your credit score determines a great deal, from whether you can buy a new car to if you can purchase a home. The better your credit score, the more likely you’ll be approved for a loan with lower interest rates.
There are several steps you can take to improve your credit score. One way is to apply for a secured credit card. Unlike traditional cards, secured cards require an initial deposit equivalent to your card’s credit limit. This deposit is a safeguard the lender can pull from if you miss a payment. Because of this deposit, secured credit cards are easier to get approved for if you have a low score.
Keep in mind that there are different types of secured credit cards. These typically don’t require an initial deposit or have high-interest fees, making them a more affordable option. For instance, you can apply for a credit builder card.
2. Create You should first manage your finances and create a budget. Creating a budget can help you better understand your finances and spending habits. It can also help you adopt better practices that lead to saving more money.
There’s a common misconception that creating a budget is difficult. Well, it doesn’t have to be. You must know your monthly income and necessary expenses, like rent, car insurance, and student loans. Then, subtract those expenses from your income to find your monthly discretionary spending. Consider this amount of “extra money” you can put toward whatever you like.
Remember that you want to be smart about spending your extra cash. For example, instead of buying something you don’t need, consider putting more toward your student loans and debt payments. Remember, the goal of budgeting isn’t to figure out how much money you can spend frivolously. It’s to help you adopt healthy habits to find financial freedom.
3. Pay Down Debt
Debt can play a huge role in your finances. It can make it difficult to save money and even afford necessities. And while paying off debt isn’t easy, it’s not impossible. The first thing you need to do is create a plan. Luckily, experts have developed several methods for paying down debt.
A popular option is the snowball method. With this, you focus on paying down your smallest loans first. Once your small debts are paid, you can start putting money toward your larger ones. What’s nice about this method is that you’ll see your loans disintegrate, which could help alleviate some of your financial and emotional stress.
Another option is the avalanche method. With this, you first focus on paying down your debt with the highest interest rate. Once this debt is born, you should focus on paying down your smaller loans. There are different schools of thought about this method. While paying down debt with high-interest rates can save you money in the long run, it will take longer. Unlike the snowball method, where you’ll see your debt disappear, the avalanche method will take longer.
4. Create a Savings Plan
According to research, many Americans aren’t saving money. A report by AARP found that 53% of United States households don’t have an emergency savings fund. If there’s anything people should have learned from the pandemic, anything can happen. It’s a good idea to be financially prepared.
That said, saving money isn’t always easy, especially if you’re also trying to pay down debt. But it’s also worth mentioning that you can pick and choose how much money you save. While there are suggestions, there’s no rule you have to put away a certain amount every month. Saving money should be a passive approach and one you determine based on your budget and lifestyle.
The first step to saving money is to open an interest-bearing savings account. Then, look at your expenses and income to determine how much you can allocate regularly. Again, the amount is completely up to you and could be as small as $10 a week or $100.
5. Reduce Monthly Bills
Chances are, you have a few recurring bills you don’t necessarily need to be paying for. Maybe you pay a monthly fee for a gym membership you haven’t stepped foot in for months. Or maybe, you have several other subscriptions you rarely use or don’t need. According to a study by Chase Bank, 71% of Americans waste an average of $50 a month on unwanted subscriptions.
To avoid wasting your money, review your expenses and highlight recurring fees. Then, determine whether or not you should keep or cancel. To help make this decision, ask yourself a few questions. Do I use this subscription? Is there a cheaper option available? Does this improve my life? Is it worth the money? If you answered “no,” it’s time to let go. Many people want financial freedom, but it won’t happen overnight. You have to work toward this goal; now is the perfect start.
