For many people, tax season marks a financial refresh. Proactive individuals can take this chance to clean the slate by getting out of debt, saving money, and establishing healthy financial habits. Here are five practices that will transform your life and put you on the path to being healthier, wealthier, and even wiser.
Pay Yourself Bills
The best way to insure that you're adequately increasing your wealth is to make saving a priority. Pay yourself a bill out of every check. A good rule of thumb is to save 10-15% of your income for retirement. If you're not used to saving, start with just one percent of your income and bump it up by another percent each month. This is relatively unnoticeable and virtually painless in terms of how much you have to modify your spending, and in just one year, you'll be saving 12 percent of every check.
Also on Z Living: Learn good money management weekly by tuning into Z Living's popular show House Poor, which features homeowners with a large house debt and finds practical ways to help ease the burden. Watch House Poor Thursdays at 4 PM. Find out where to watch the show here.
Build An Emergency Fund
No one is immune to emergencies: broken bones, car accidents and family crises happen to all of us. Make these times as bearable as possible, by having a nice stash of cash set aside to be used only when necessary. To start, aim to have $1,000 in the account. As you get your finances in shape, increase it so that you have three-to-six months of living expenses always put aside.
This money should be kept far enough away to make it difficult to access for shopping sprees, but easy enough to access when you need to pay the $600 electrician's bill. A savings account at your non-primary bank is a great idea, as is a money market account.
Follow A Budget
Many people who live paycheck-to-paycheck say they just don't have enough money, but a budget really puts these numbers into perspective. Take a bird’s eye view of your finances to find out what you can actually afford, be sure to allocate money for the basics like your home, food, clothes, car, and health care. Once you have these universal expenses laid out, you can make plans for paying off debts and saving for vacations.
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Pay Off Debt
Eliminating debt is one of the most common financial tips around, and there are differing ideas about how to go about it. In the end it doesn’t matter very much about whether you start your lowest balance (to get a quick win and keep your motivation high), or tackle your payments with the highest interest rates first. Once you're able to use your paycheck for your living expenses, and free from student or car loan payments, you'll be able to make so much traction when it comes to bulking up your retirement savings, buying your dream car, or putting a downpayment on a house.
Yes, you read that right. It's hard to see the financial connection at first, but exercising daily will keep you health care costs and life insurance premiums as low as possible. Say you lose 30 pounds, you might qualify for lower premiums, and your quality of life will go up. Also, if you're healthier, you will miss less work, and that could impact your chances at getting a promotion or a better job.
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Remember, that forming a habit takes at least a few weeks, so choose one to start with and implement it today. Don’t give up when you find that you spent $10 extra on groceries; just start over again the next day. By working on one habit consistently, you’ll soon transform it into a way of life.