About 60 percent of Americans admit to making New Year’s resolutions each year. Financial resolutions are some of the most common; saving more and spending less was the fourth top resolution in 2019, according to an Inc survey.
If bettering your relationship with money is one of your top resolutions, here are seven ways to get your finances in shape in 2020.
1. Check your credit report
Your credit report plays an important role in your life. It’s what lenders look at when deciding whether or not to issue you a loan and what interest rate you should receive.
Unfortunately, errors and fraudulent activity are common. There can be mistakes on your credit report, such as accounts that don’t belong to you or past due payments, that can damage your credit.
You should check your credit report regularly to look for errors and inaccuracies. You can check your credit report from each of the three major credit bureaus once a year at AnnualCreditReport.com. If you find any problems, you can dispute the issues directly with the three credit bureaus:
2. Review your credit card statements
Get in the habit of reviewing your credit card statements in full each month on a set day. Look for fraudulent charges that weren’t authorized by you, but also look for recurring charges for services that you don’t use anymore.
Your monthly recurring charges can add up. You might have a gym membership, a streaming service subscription, cable service, and other charges, costing you hundreds each month. Canceling those unused services can allow you to save thousands each year.
If you’re overwhelmed by canceling all of those subscriptions, Trim can help. It’s a service that automatically scans your statements for recurring charges. If you no longer use them, Trim will cancel them for you.
3. Switch to a high-yield savings account
If you have money tucked away in a savings account, it’s likely not earning you much in interest. Most accounts have an interest rate of 0.09% or less.
You can make your money work harder for you by transferring your savings to a high-yield bank account. Moving your money to an account with Marcus, Discover, or Axos can help you earn up to 1.8% interest. That higher rate will allow you to earn more money over time.
For example, let’s say you had $10,000 in a savings account at 0.09% interest. After five years, your balance would be just $10,045.10; you would’ve earned just $45.10 in interest.
But let’s say you transferred your $10,000 into a high-yield savings account and earned 1.8% interest. After five years, your balance would be $10,941.01. Taking a few minutes to transfer your money would allow you to earn nearly $900 more in interest.
4. Sell unused stuff
You likely have unused items sitting around your home. Whether you have old toys, sports equipment, clothes, furniture, or electronics, you can turn that stuff into cash. You can sell your items on sites like eBay, Poshmark, DeCluttr, and the Facebook Marketplace.
Use your newfound cash to start an emergency fund, or use it to pay down debt to better your finances for the new year.
5. Compare car insurance quotes
According to The Zebra, the average cost of car insurance is $1,502 per year. If you’re paying more than that, or you haven’t shopped around for a policy in a while, compare car insurance quotes to ensure you get the best rate.
Looking for a new car insurance policy — and adjusting your coverage levels and deductibles to match your current situation — can help you save hundreds each year.
6. Pay down debt
If you have debt, you’re not alone. According to Experian, the average American has $6,200 in credit card debt. Having high-interest debt can be expensive, and can be a heavy burden on your shoulders. In 2020, focus on coming up with a plan to repay your debt:
- Make extra payments: Make sure you make all of the minimum payments on your debt. If you have any extra money left over each month — even if it’s just an extra $10 — put it toward your debt to help you save money on interest charges.
- Cut your expenses: Review your credit card and bank statements to find areas where you can cut back. For example, you might skip eating out or going to bars. Reducing your monthly expenses will keep you from getting further in debt, and you can free up more money to make payments toward your balances.
- Consolidate your debt: If you have high-interest debt, you can save money and pay off your balances faster by consolidating your debt with a personal loan or a balance transfer.
7. Automate your savings
If you don’t have an emergency fund or simply need to save money, setting up automatic deposits can be a great way to get started. Set up recurring deposits from your checking account to a separate savings account. Even small amounts can add up if you keep making them on a consistent basis.
You can take it a step further with apps like Acorns or Stash. They monitor your spending and round up your purchases to the next full dollar amount, depositing the extra change into your account. Over time, your spare change can grow, allowing you to save hundreds without realizing it.
Managing your money
The new year is the perfect opportunity to review your finances and to take steps to better your current situation. By instituting good habits now, you can pay down debt, build your savings, and save money throughout the year.
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