The new year is a great time to take a fresh look at your finances. Ready for a boost in 2017? Here are seven steps to give you a running start.
1. Know your credit score
Your credit rating not only affects whether you can get approved for future credit, but it also may factor into the fees you pay for loans, credit cards and insurance policies, even whether a landlord approves you as a tenant. Keeping track of your credit score can help you put together a game plan for improving your finances, whether it’s paying off debt or finding better rates on your accounts. Scores usually range from 300 to 850 — the higher, the better.
2. Cut high-interest debt
If you have existing loans with high rates, consider consolidating the debt into a single lower-rate loan. More of your monthly payment can then go toward lowering the balance. If you carry balances on high-interest credit cards, think about making a balance transfer to a card that offers a promotional 0% APR. Look for a card that doesn’t charge a balance transfer fee, and aim to pay down the debt by the time the promotional period ends.
3. Open a new checking account
Major U.S. banks charge monthly fees of about $10 to $12 for even the most basic checking accounts. That adds up. If you’re paying a similar amount to your bank, try switching to a new checking account that doesn’t have a monthly fee, or at least one where the monthly fee is easy to waive, such as by signing up for direct deposit or having a low minimum balance. It would be like giving yourself an annual bonus of $120 to $144.
4. Boost your savings rate
Is your spare cash sitting around in an average savings account, earning a rate that’s barely over half a percent? You can do better. Higher-yield savings accounts can earn twice as much, around 1% APY or more, so it pays to shop around. Your money can grow faster with little effort on your part. And if interest rates rise this year thanks to the Fed rate hike, the rates on these accounts could rise, too.
5. Simplify your budget by automating
If one of your money resolutions for 2017 is to do a better job of sticking to your budget, make it easy on yourself by setting up automatic deposits and payments. Arrange for regular transfers to your savings and investments accounts, and automate payments for fixed expenses. Once you have the big items covered, it’ll be easier to deal with smaller expenses.
6. Get a side hustle
If you need to increase the “income” column in your budget, consider applying for a part-time job, or become one of the 55 million Americans who freelance. Start by identifying an interest or hobby you have that others are willing to pay for, such as photography, marketing or tutoring skills. Then spread the word that you’re looking for work. You could soon have a nice new income stream in the new year.
7. Plan beyond 2017
Think way beyond, as in retirement. The earlier you save, the more your money can grow. This is true even if you put away only a small amount each month. Consider increasing your 401(k) contribution by 1% or opening an IRA if you don’t have a retirement account. Take steps now to build a cushion. In the future, when 2017 is a just a distant memory, you’ll be glad you did.