The youngest generation of Americans has made ambitious New Year resolutions for 2022: more exercise, a healthier diet and more organization. But one of the most popular goals of Generation Z – who are 24 years old and younger – is to improve their finances.
That’s according to Student Beans, who surveyed more than 2,000 Americans ages 16 to 24 to determine their resolutions for 2022. The survey found that 57% of Generation Z consumers with a New Year’s resolution want to save more and spend less.
If your goal is to start building better money habits in 2022, there are 5 ways you can achieve your goals:
- Track your expenses
- Build Your Credit Score
- Start an emergency fund
- Find ways to cut expenses
- Pay off credit card debt
Read more about each financial strategy in the sections below.
5 BEST FINANCIAL SOLUTIONS FOR BEGINNERS TO BUILD BETTER SPENDING IN 2022
1. Track your expenses
Budgeting can give you invaluable insight into your spending and money savings, but it can feel like you like a time consuming task. Fortunately, there are plenty of free budgeting tools on your computer or smartphone that you can use to automatically track your financial progress.
Budget apps like Mint, Goodbudget, and Personal Capital give users the ability to track their expenses, invest their savings, and set financial goals for free. Some of these apps will securely connect to your bank accounts to automatically categorize your purchases into categories like groceries, restaurants, and utilities. This will help you identify where you may be overspending.
You may be able to set up push notifications or email notifications to give you real-time insight into your monthly budget. Visit your device’s app store to find a budgeting app that fits your needs.
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2. Build your credit rating
Young consumers who are just getting into the job market may lack an in-depth credit history, which means they could miss out on the many benefits of good credit. Good credit can help you qualify for the best deals on various financial products, such as credit cards, student loans, and even mortgages.
Improving your credit score can be as simple as paying your bills on time, However, it can take time to build your creditworthiness using this strategy alone. You might consider opening a secured credit card or becoming an authorized user on a family member’s credit card for a quick credit history check.
It is also important to keep track of your credit history in order to Find room for improvement and spot fraud before it becomes a major problem. Request a free copy of your credit report from all three credit reporting agencies – Equifax, Experian, and TransUnion. You can also sign up for free credit monitoring services with Credible.
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3. Start an emergency fund
A solid emergency fund can avoid taking on debt during financial emergencies like unexpected car repairs or medical bills. Experts recommend that you should have enough cash in your emergency fund to cover expenses for around 3 to 6 months.
You can automate your savings contributions by making a direct deposit from your paycheck into a separate bank account. Better still, a high-yield savings account can help you grow your emergency fund with interest over time without the effort of yourself. Visit Credible to search for high yield savings accounts for free without sacrificing your credit score.
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4. Find ways to cut expenses
After you’ve set a budget and started tracking your spending, you may find that you are spending more than you are saving. The 50/30/20 budgeting rule says that you should spend 50% of your income on essential expenses such as rent and utilities; 30% of your income for discretionary purchases such as restaurants and entertainment; and 20% of your income on savings or debt payments.
Discretionary spending is the first category that you should try to cut spending, such as: If, at your own discretion, you have reduced your purchases as much as possible and you are still struggling to meet your savings goals, the following methods may help you save money on your necessary monthly expenses:
- Look for cheaper insurance coverage. You may be able to reduce your monthly premiums by bundling your rental deposit and auto insurance policies. You can search for auto, home and life insurance on Credible.
- Make sure you get a lower mortgage rate by refinancing. While not many Americans under 24 are likely to have a mortgage, those who do might consider refinancing at a lower interest rate with Credible to reduce their monthly mortgage payments.
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5. Pay off credit card debt
High interest credit card debt is an expensive burden that can prevent you from achieving your financial goals. If you can’t afford the minimum payment on your credit card balance, there are a few strategies you can use to settle credit card debt:
Debt avalanche or debt snowball. The debt avalanche method is when you focus on paying off the credit card with the highest interest rate to save the most money over time. With the debt snowball method, the smallest credits are paid off in order to get going while getting debt free.
Loan advice for non-profit organizations. Credit counseling agencies offer free or low-cost financial education services to consumers who are having difficulty managing their debts. They can create a debt management plan (DMP) to restructure your debt payments, and they may even be able to negotiate with your creditors to lower the amount you owe or the interest rate you paid.
Debt Consolidation Loans. Getting out of debt by taking out another loan may sound absurd, but this strategy can help you save money on the interest while paying off the debt with a consistent amortization schedule. The interest rates on debt consolidation loans are typically much lower than credit cards, which can translate into savings of hundreds or thousands of dollars over time. Visit Credible to compare debt consolidation loan offers and see if this option is right for you.
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