If you're like most people, you're planning to ring in 2010 by making a slew of lifestyle changes. The great thing about a new year is that it gives you a fresh start. Maybe you didn't use that home gym as much as you wanted to in 2009, or maybe you didn't stick to that low-carb diet. A new year is a great opportunity to get back on track.
This year, as you gear up to say hello to 2010, don't forget about your finances. Spend a little time getting up-close and personal with your checkbook and make a plan to curb your spending and fatten up your savings account.
Don't know where to start? Read on for seven tips for a financially healthy 2010:
1. Avoid the mall. Seriously. As 2009 draws to a close, your favorite retailers will be running end-of-year clearance sales on everything from major appliances to winter coats. Unless you absolutely must have a new refrigerator, pass on the sales and put your extra money into your savings account instead.
2. Cut the cards. Got credit card debt? There's no time like the start of a new year to change your spending habits and start putting a dent in your debt. Make a resolution to start paying off your credit cards. And, more importantly, make a resolution to stop using your cards, period.
3. Start an emergency fund. Credit cards can be hard to cut when you use them for emergencies. So start an emergency fund! A good way to make sure that you don't have to rack up loads of credit card debt is to start socking money away for those unplanned emergencies. A good rule of thumb for most people is to have about three months' salary in a separate account. But, don't let that figure intimidate you: Decide what you can realistically put away, and go from there. If you start in January, you'll be surprised how quickly your money will add up.
4. Curb your impulses. From fancy cupcakes to fashion magazines, DVD rentals to fast food – everybody has a few inexpensive vices. But, these little luxuries can add up to a big drain on your wallet. The New Year is a great time to cut down on impulse purchases. Got a daily eating out habit? Kick it down to twice a week. Addicted to convenience foods? Make a lunch at home and brown bag it. You'll be surprised at how much you'll save.
5. Be a savvy shopper. Even the most financially savvy people in the world still have to go grocery shopping. But, there are dozens of ways to shop smarter in 2010 and stretch your dollar when stocking up on the necessities. Clip coupons and watch store circulars for double (or even triple) coupon events. Consider switching to store-brand items whenever possible. In most cases, they're just as good as the national brand and can save you some serious money. Also, get in the habit of making a list before you go out – it'll help you stay focused and buy only what you need.
6. Check your credit. From helping you secure a home mortgage to, in some cases, landing a new job, your credit report is used in countless ways. All consumers are eligible for a free annual credit report from the three major credit bureaus: Experian, TransUnion, and Equifax. Start the New Year off right – request a copy from each and read them carefully. Not only does this give you the chance to dispute errors, taking the time to check up on your credit can also alert you to fraudulent activities, like accounts you didn't open or charges you didn't make.
And finally, my most important tip for 2010:
7. Write a budget. And stick to it. Writing a budget isn't nearly as scary as it sounds. And, a budget is a great way to make sure that your finances stay on track in 2010. It's pretty easy: Start with your total monthly household income, then deduct your bills (like your rent or mortgage, utilities, car payments, etc.) and expenses (like gas and food). After that, decide how much you want to put in your savings account and how much will go to your emergency fund. And, don't forget to leave yourself a little fun money for the occasional restaurant meal or night at the movies. And remember to be flexible: If you find yourself a little strapped for cash after you've worked out your budget, don't ditch it altogether – make adjustments until you hit on a budget you can live with.
Making a few simple adjustments to your spending and saving habits can go a long way. Follow these tips and you'll be on the way to a financially secure new year.
Good luck and have a happy, healthy 2010!
Michael G. Peterson co-founded American Credit Foundation, a non-profit credit counseling organization. Visit debtguru.com for more information and financial resources.