If you've resolved to improve your finances in the coming months, you'll need a solid plan to set yourself up for success. Here are three ways to help you better manage your money in 2018.
Start a budget. A budget is just a plan for every dollar you earn, and there are a lot of tools to help you strategize. Start with your monthly after-tax income and then list your monthly expenses, including set payments such as the rent or mortgage as well as those that vary, like utilities, credit cards and gas. Don't forget extras, such as streaming subscriptions, or expenses like car insurance that only crop up a few times a year.
Pay down debt. Your budgeting process should have identified your debts, so now you need to focus on repayment. Two common methods can help with this: There's the avalanche approach, which prioritizes your highest-interest debt, and then there's the snowball method, which focuses on paying back your smallest debts first. While the avalanche method saves you the most money in the long run, some say the small wins of the snowball approach can help keep you on track.
Build an emergency fund. Having three to six months' worth of savings can help you avoid relying on high-interest credit cards in the event of a job loss or other emergency. Cutting costs is an obvious first step in unearthing those savings, so try to make more meals at home, take advantage of loyalty programs and avoid small, frequent purchases like morning coffee. Once you've saved a little bit, make the most of these funds by placing them where they'll offer better returns than a traditional savings account.
Getting your finances in order isn't always fun or easy, but following the guidelines above can help you get off to a good start.
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