The new year is almost here, and with that comes the opportunity to restart and refocus. It’s no surprise that one of the top resolutions for any new year is to get your finances in top shape. Today we are going over six new year’s resolutions that can get your finances working with you, not against you.
If you haven’t started a monthly budget yet, now is the perfect time. Monthly budgets are the best tool for getting a handle on your finances, as it allows you to see exactly how much you have coming in every month and how much you have going out. Looking at a budget allows you to precisely pinpoint where you might be spending a little too much and gives you an opportunity to amend.
Budgeting is relatively easy, it just takes some time to get organized. Start by gathering your bills, statements, and pay stubs for the last year (or have them pulled up online). Then record the following:
Get all of that information into a spreadsheet and see how everything adds up and where you can stand to make some changes.
Your credit score is an indicator of your financial health–for you and for your lenders. The better your score is, the easier your financial life will be. Having a good credit score can help you in many ways:
Credit scores range from 850 to 300 and are broken down into five categories.
You will get the most benefits from having excellent or very good credit, and improving your score by even just a few points can help you score a better interest rate or push your credit limit higher.
Credit scores are calculated based on your payment history, accounts owed, credit history length, credit mix, and new credit. Focusing on improving any of these areas can prove to be very beneficial for your financial health, but here are some of the most impactful ways to improve your credit score:
Saving more money is always a top resolution for the new year. There are many ways to do this depending on what your goals are. Saving money goes hand in hand with creating (and sticking to) a budget, so consider doing this in tandem with resolution number one.
Small changes can add up to big savings, so study your budget to see where you can cut costs.
Your credit report is vitally important to your financial wellbeing, but most people do not regularly check it. This can be a huge problem, as you may not know if there is an issue until it is too late.
You can check your report for free once per year from each of the three major credit agencies: TransUnion, Equifax, and Experian. You want to take advantage of this and check your report every four months.
Credit reports contain the following information:
While this may seem like a lot to go over, keeping up on it every few months can make the task much more manageable. When you get a copy of your credit report, be sure to check for the following
Report any errors to the agency as soon as you notice them. They will review within 30 days and can amend any issues. This can have a big effect on your credit score as well, so you don’t want to ignore this task.
If you have any high interest loans, such as your mortgage or car payment, this may be the year to refinance those loans. When you refinance a loan, you are essentially starting over with a new loan that will have better terms, such as a better interest rate or repayment plan. This can save you a lot of money over the life of the loan, and/or can make your monthly payments much more manageable.
If you refinance a car loan to a lower car loan APR you will save money every month in interest and save in total over the life of the loan. If you refinance to a shorter repayment plan, you will save money over the life of the loan by paying interest over less time. Your monthly payments will be higher by doing this however. You can also refinance to a longer repayment plan, which will reduce your monthly payments by a lot. By doing this you will pay more money over the life of the loan however since you will be paying interest over a longer period of time.
Refinancing your car loan may make sense if any of the following apply to you:
The best news is that refinancing your car loan is super easy when you use a company that specializes in refinancing. Auto Approve experts can help guide you through the process and start saving money immediately (no need to wait for the new year!)
It’s incredibly important to have an emergency fund. For most Americans an unexpected cost can really throw their finances for a loop, and you don’t want to get caught on the wrong end of a bill you can’t afford.
Emergency funds can help protect you from the unexpected. How much you should have in your emergency fund depends on a lot of factors in your life, such as how many dependents you have, how much your monthly expenses are, and how in-demand your job may be. But you should aim to have at least a few months worth of expenses stashed away somewhere.
A good way to start an emergency fund is to build it into your monthly budget. Treating your emergency fund as a bill that you have to pay will help you to constantly add to it and allow it to grow without too much effort. Start with $100, $50, or even just $25 a month–whatever you can afford really. Try to keep it in an account where you can build a little interest, but don’t lock your money away in an account where you will be fined to take it out. The point is to have the money easily accessible.
We hope these resolutions will inspire you to take charge of your finances in the new year. A little planning and good intention can help 2023 become your best year yet.
If refinancing your car loan lands on your to do list for the new year, get in touch with Auto Approve today! Our experts are here and ready to help you save money with a brand new car loan.