6 Great New Years Resolutions When It Comes to Your Personal Finances

It’s that time of the year again, where our personal finances may be plummeting in preparation for the holidays. Don’t despair; there is light at the end of the tunnel. January first brings a fresh slate, a motivation to get things in order, and a chance to kick bad habits – including financial ones.

Here are four great ways to get your personal finances back on track and leave bad spending habits behind you; debt is so 2020!

1. RETHINK YOUR SPENDING

Saving money doesn’t mean that you can no longer spend on fun or gifting. However, it does mean that you will have to work a little harder to prioritize your flexible income. Try to rethink the way you spend; for example, consider the following ideas.

• Gifting | Some people are gift-givers, and that is truly a part of their personality. While a gift-giver may take every opportunity to show they care by spending money, there are many ways to reduce the financial burden of a generous spirit.
  • Reduce the frequency at which you buy people gifts, yes even little gifts, at least by half.
  • Try writing your feelings of gratitude and friendship in a notecard, something the recipient can hold on to and cherish.
  • Make your friends a meal and drop it by their home.
• Wardrobe | For many, especially those that require specific clothing for work or who have children that keep growing out of their clothes, new clothes are inevitable…and costly. Reduce that cost by getting creative.
  • Drop your lightly used items off at a consignment shop. Use the percentage you earn from selling them on new items from that same shop.
  • Throw a clothing-exchange amongst friends. Use Zoom or other video chats to host a virtual exchange.
  • Carefully consider which items you need to add to your wardrobe. You can quickly build new outfits with just the addition of a couple of clothing items, as opposed to bringing in whole new sets.
• Entertainment | Now more than ever, we all need entertainment as a refreshment from the stress of our new normal. While arenas and the like are still closed in most cities, it can be a little too easy to overspend at the click of a button from the comfort of home.
  • Share streaming accounts with friends and family. For those who live alone or rarely use their streaming account, consider sharing your account. Saving 50% of those services adds up.
  • Get creative with virtual gatherings. Rather than take-out over Zoom, why not encourage your friends to join you for a “Healthy, yummy, and cheap!” cooking challenge over video conferencing? You will not only be saving on the price of take-out, but you will also be having a great time and adding a healthy, inexpensive meal to your repertoire.
  • In cities where movie theatres may be open, opt for a virtual movie night instead. Stay safe at home, invite your friends to Zoom and stream a new movie together.

2. RETHINK YOUR SAVINGS

Now that you have some easy and effective ways to reduce spending in mind, let’s look at a few great ways in which to build your savings.

• Savings Accounts | The obvious go-to for saving money is a savings account. While it seems like a simple arrangement, there are multiple options, each with their own strengths. “Knowing how the various savings account options compare can make it easier to select the right place to keep your money.” – Forbes.com
  • A basic savings account is easy to open, has no minimum, earns interest (although at a minimal rate), and you can easily access the branch when needed.
  • An online, high-level savings account earns higher interest rates, has a lower opening minimum than physical banks, and rarely charge monthly fees.
  • A TFSA (Tax-Free Savings Account) is a great way to save. “Any amount contributed as well as any income earned in the account (for example, investment income and capital gains) is generally tax-free, even when it is withdrawn.” – Canada.ca
• Emergency Funds | An emergency fund is essential for healthy personal finances. The money you save in the emergency fund will keep you on budget even in the event of an unexpected cost, like a car repair, home repair or job loss.
  • Your goal for an emergency fund should be equal to six months’ pay.
  • If six months’ pay is not reasonable for your current situation, focus on saving up to increments. They add up quickly.
  • Shop around for an account to build your emergency fund. Banks often compete for business, offering up to $500 and other incentives that can go towards your fund.
• Investments | Investments can be as simple as an app on your phone or as complex as hiring a financial firm. Start slow and secure for a positive experience.
  • Avoid a lifestyle creep, saving the extra money you earn in bonuses or raises as you get older and earn seniority, and invest it.
  • Look into the various legitimate mobile apps for investing. The Balance reviewed cost, ease of use, investment options, and other key factors to come up with the best mobile investment apps, for easy investing.
  • Don’t take high risks. You only want to invest your flexible income. Never risk your rent, grocery money, etc., in investments. You want to earn money, and losing your living is never worth the risk.

Don’t wait until January first to start putting some of these suggestions into practice. Adjusting what you can now, in preparation for the new year, will make keeping your resolutions that much easier. In the meantime, if you need a little extra help to make it through the holidays, 24 Cash is a Canadian company supporting Canadian residents. Our online small loans are simple, quick and reasonable.