It’s that time of year again. A brand new year and time when we talk about our resolutions to better ourselves at work, home, and in many other ways.
This year, why not add a financial goal to your resolution list? Even if you’re not the type to make an “official” New Year’s resolution, here are some simple steps you can take to prioritize your finances in the new year.
1. Set a budget—and stick to it
If you’ve ever been derailed by an impulse purchase or an unexpected expense, you’re not alone. Budgeting, and including some room for sudden expenses, is one way to be more prepared the next time something unexpected comes up. This year, try using some of the Consumer Financial Protection Bureau’s (CFPB) tools to help make budgeting work for you. Their spending tracker is a great way to start looking at where your money is going and see any trends in your spending. As you list out your spending over a few weeks, you may find areas you can cut back or reduce—things such as going out to eat or a subscription you rarely use. Then, you can try filling out a cash-flow budget . This weekly tool helps you assess your income and expenses to make sure you have enough to cover your bills and put aside money for savings goals or other things you want and need.
2. Get ready for a new home—with confidence
Thinking it might be time to move? If you’re not sure if you’re ready to buy a home quite yet, CFPB’s guide to renting vs. buying shares some helpful insights.
If this is the year you think you’re ready to buy your first home, then congratulations—you’re in for an exciting time filled with many decisions. Before you make any decisions, learn about the factors that determine your interest rate and how to decide how much to spend on a down payment. Once ready, CFPB has resources and tools to help you each step of the way, taking you through shopping for a mortgage and closing on your home.
3. Shop for any loans you plan to take out
Looking to finance something like a new home, education, or a new car? While you might carefully search for the right home or school to attend, it’s just as important to shop for the right loan for you. Fully understanding the total cost of your loan and how long it will take you to pay it down will help you stay in control of your financial situation—and may save you money in the long run.
For example, saving even a fraction of a percentage point on your mortgage interest rate can lead to thousands of dollars in savings over the life of the mortgage.
- Explore home loan rates with CFPB’s mortgage interest rate tool.
- Compare college costs and financial aid offers to see how they might impact you down the road.
- Use CFPB’s auto loan shopping sheet to help you compare offers, see the total cost, and negotiate the best deal.
4. Deal with debt
Dealing with debt is a reality for many adults at some point in their lives—whether paying off student loans, a mortgage, or other bills. The new year is a time where you can decide to get a handle on your debt and make some positive progress. If you’ve fallen behind on some payments, there are steps you can take to get back on track. If you have a debt in collection and debt collectors are contacting you, CFPB also has resources to help you decide how to respond. While it may be tempting to avoid the issue, you can save yourself stress and more problems in the long run by taking control.
- Behind on bills? Three steps to help you make tough choices in tight moments.
- There are several debt collection resources can help you understand how debt collection works and what your rights are.
5. Boost your credit score
If it’s been a while since you’ve checked your credit records, you can kick off the new year by seeing where you stand. You’re entitled to a free credit report each year from each of the main credit reporting agencies. As you review, check closely for errors. If you see anything that looks like a mistake, you should contact the credit reporting agency to dispute it. If you want to improve your credit scores, you can try to incorporate some credit best practices into your financial routine. First, make sure to pay all of your bills on time every billing cycle. Missed payments can lower your scores, so try to make at least the minimum payment on time—or more, if you can afford it. You should know that applying for several new cards or loans in a short period of time may actually lower your credit scores. It’s very important to your credit score to manage the credit you already have—responsibly.
CFPB’s credit reports and scores resources can help you better understand your credit reports and scores, learn how to correct inaccuracies, and improve your credit record over time.
Written by the Consumer Financial Protection Bureau.