How to Manage Your Money Better in 2015

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Saving money is one of the most common New Year resolutions; and one of the most commonly broken ones. Check out this article for a few tips that will help you turn your finances around and end 2015 wealthier.

The end of the year is a hectic time for many of us. We juggle parties, travelling, shopping, cooking, spending time with our loved ones. The last thing we want to do is think about money. We express a vague intention to cut down expenses and establish an emergency fund in the year to come, but we rarely take the time to figure out exactly how to make our financial dreams come true. This is often the main reason why we’re unsuccessful – we’re not specific enough when crafting our goals.

According to Statistic Brain, 45 percent of Americans regularly make New Year resolutions. Unfortunately, only 8 percent of them manage to achieve their goals the next year. It’s easy to keep your motivation up on January 8th; it’s more difficult to pull that off in the middle of June, in the midst of planning our vacation. The same research states that 75 percent of people who set resolutions maintain them for a menial week. Only 46 percent make it past six months.

To get your financial house in order you need to start by assessing your current situation and see what kind of improvements can be made. Review your financial goals from last year and determine what went wrong. Identifying your most damaging spending habits will help you make necessary adjustments for 2015. For a bit of inspiration, here are four financial habits to live by in the year to come.

Never Borrow For Consumption

Only borrow money if it will help you build wealth in the long run. Student loans pay for your education, which then enables you to jumpstart your career. Buying a home is an investment, since you’ll slowly build equity instead of paying rent every month. Taking out a loan to finance your own business is a risk worth taking, especially if your idea has serious potential. This is healthy debt.

Unhealthy debt, on the other hand, is that kind of debt you accumulate while failing to live within your means. Charging a new gadget on your credit card just to treat yourself, when you know you wouldn’t be able to afford it otherwise. Applying for a personal loan to finance a luxurious vacation. Buying a new car because you’re bored of your old one. There’s an old saying that goes like this: “He who buys what he does not need, steals from himself”. For 2015, make a resolution not to accumulate any kind of bad debt. Furthermore, keep in mind that even good can become dangerous if you can’t afford to make your payments every month.

Pay Down Debt

The first step towards paying down debt is to figure out exactly what you owe and develop a debt repayment plan. The simplest way to do this is to determine which debts takes priority, based on their current interest rate. Focus on paying off the debt with the highest interest rate first, and move forward from there. Additionally, you could also call the lender and ask for a rate reduction, or, if you’re dealing with a credit card, transfer the balance to another card for a lower rate. The Simple Dollar has some tips on the subject that will come in handy.

For further assistance, Avidia Bank ( www.avidiabank.com ) developed a few useful tools for people looking to improve their finances. They have a calculator that computes how long it will take to pay off a credit card debt, as well as one that helps you find out how much money you can afford to borrow. You can access them both here.

Save More

Too many Americans are living paycheck to paycheck. If you don’t have an emergency fund yet, establishing one should be your first priority in 2015. It’s even more important than paying down debt. Think about it: when emergency strikes and you don’t have any cash available, you will resort to cover your unexpected expense with credit, further accumulating debt. It doesn’t matter if you start small – even setting aside $20 every week is a good start. Here are some easy tips that will help you save money.

Next, make sure you contribute to a retirement account. Contribute to a 401(k) plan. This way, a set percentage of your paycheck will be sent straight to your retirement account every paycheck. Does your employer offer a match on your contribution? Then you will basically get paid to save. If you don't have access to an employer-sponsored retirement plan, make a deductible contribution to an IRA (Individual Retirement Account).

After learning how to manage your money comes the tricky part - sticking to your plan. To increase your chances of being successful, make your resolutions public and ask your family or friends for help. They can motivate you when you’re not feeling confident enough in your ability to keep your spending on track. In the end, determination, support, and a good budget are all the tools you need to achieve your money goals.