5 Simple Steps to Manage Your Money in the New Year by Katie Gibbons

It’s a new year and a popular time to concentrate on your finances, again. Maybe you were fortunate enough to finish up last year on top of your finances, but for many, living paycheck to paycheck is the norm. In fact, according to research by LendingClub Bank, 6 out of 10 families were living paycheck to paycheck in 2022.

If you felt the squeeze that so many felt in 2022, perhaps this is the year for you prioritize your finances. The first places to start when it comes to managing your money is making time to sit down and look at it. Don't let procrastination creep in!

Here is a step-by-step guide to help you get into action. Let’s break down how you can turn that around and manage your money in the new year.

Step 1 // organize your money

The simple step of organizing your money will allow you improve your mental health and lower your stress level about money.

Pick a day to pull all of your statements and bills and look at them. Here is a list of the accounts you should be reviewing and have access to, either in the form of a physical or digital statement.

Once you have all of these visible, take the time to look at the balances and make sure that you have access to review these at least monthly.

step 2 // create a spending plan

Setting up a spending plan each month helps you visibly see where your money is going. If you want to manage your finances better, make a plan. Without a plan, you end up spending more and getting to the end of month with no idea of where your money is going.

Whether you decide to use a spreadsheet method or a budgeting app, sitting down before the month starts to determine how you are going to spend your money is a vital step in getting ahead financially.

If creating a spending plan for an entire month seems overwhelming, try making a bi-weekly budget that corresponds with your paycheck. Paycheck budgeting is the best way to stay focused on your plan and will help you reach your financial goals with less stress.

step 3 // keep track of your payments

By keeping track of your bill due dates, you are better able to manage when automatic payments are coming out or when you need to initiate the payment.

By not paying bills on time, you run the risk of being charged unnecessary fees like overdrafts and late payment fees. Also, when bills are not paid on time, you run the risk of it lowering your credit score.

There are a few ways to keep track of your payment due dates. You can use a paper calendar and mark due dates at the start of each month. You may also try setting a reminder on a digital calendar. Whatever system you use, make sure it is something that you refer to on a regular basis.

step 4 // open separate accounts based on your goals

When you are managing your money, simplicity is important. Trying to keep track of balances within one account is counterproductive. It is important to clearly define the goals you have for your money and open separate accounts based on the goal.

For instance, setting up an account to separate savings that match along your goals like vacation, house maintenance or a future auto purchase, will help you keep track of your expenditures and creates more ease and clarity.

step 5 // set up a debt payoff & savings plan

Decide and plan to paydown debt and fund savings accounts. The best place to start is to create a Monthly Spending Plan where you have identified fixed and variable expenses.

Fixed expenses should include a defined amount to fund savings accounts as well as payoff debt.

Sticking to a plan that is established prior to the month beginning will ensure that you are giving your money direction. This allows you to control variable expenses and will help you stay on track.

Managing your money is an important part of helping you stay on track. Often, when life gets busy we tend to put managing finances on the back burner. This happens to most people, so do not beat yourself up or get discouraged. It becomes easier and more manageable the more you pay attention to it and practice.