January is Financial Wellness Month, and as the first month of the year, it’s the perfect time to get your financial affairs in order. There are a handful of steps you can take to improve your financial situation in the new year, so let’s learn a little more about those below.
- Budget – Ensuring you have enough money to pay for your everyday expenses is an extremely important part of improving your financial wellness. Cataloging what you spend your money on every month and putting money away accordingly is a smart way to ensure every dollar earned is accounted for to eliminate frivolous spending.
- Create an emergency fund – Life is unpredictable – there’s no other way to say it. Sometimes, this unpredictability can take a hit on our finances. When something comes up – your washer or dryer break down, your roof starts leaking, your basement floods, etc. – don’t be left out to dry financially. Putting away a small amount every paycheck until you save around three to six months’ worth of expenses can add a much-needed cushion to your financial situation. While the exact amount will vary from person to person, you can figure out your goal amount using an emergency fund calculator, like the one found here.
- Reduce debt – Having outstanding debt tends to loom over people and can make it hard to get where you want to be financially. Working on shrinking or eliminating debt altogether can improve all aspects of your finances. While paying off your debts all at once is a lofty and often unrealistic goal, chipping away by paying off as much as your budget allows is a great place to start.
- Plan ahead – Write out all your current financial responsibilities and the due dates of your bills for every month. This will help you consider the importance of all these responsibilities while also helping to plan ahead when it comes to ensuring these payments are made on time.
- Figure out where your money is going – Going off the last point, it’s always a good idea to take inventory of what exactly you’re paying for every month. There are some payments you can’t get out of: your mortgage, taxes, monthly bills, etc. But laying out where every dollar is going can help you find things like subscriptions you’re still paying for but aren’t using that can free up some of your income every month.