If catching up is one of your resolutions for 2021, you’re in the right place. Find out how to spend the new year with a more balanced budget.
Eating 12 raisins and making 12 wishes at the first 12 bells is one of the classic New Year rituals. Alongside promises to start going to the gym or quit smoking, one of the most common resolutions at this time is finally catch up on accounts to start the year off on the right foot.
The beginning of a new year is therefore a good time to analyze all your accounts and adopt measures to balance the family budget. It is also the moment to reflect on what can be improved compared to the previous year.
With some commitment and self-control, in most cases, catching up with accounts, as early as 2023, is possible. To help with this task, we have nine pieces of advice that may be useful to you.
What does it take to catch up on accounts for 2023?
Starting the year in good financial health is not impossible. But as in everything in life, also in the world of personal finance, discipline, consideration and common sense are the key.
Do not believe? Then take a look at our tips and become responsible for your financial success in 2023.
Getting out of debt is the first step to getting your bills in order. Because? Because these are the number one enemy of savings.
If you have several credits, start paying off the biggest ones to pay less interest.
You should also make an effort not to resort to splitting your credit card expenses. In this way, not only do you keep expenses under your control, but you also avoid further debt with interest.
If you have more than one, also reduce the number of credit cards (you save on annual fees and also reduce the risk of buying on impulse) and use them responsibly, only when strictly necessary.
Review the conditions of your credits and insurance
The beginning of the year can be a good time to renegotiate the conditions of your credits or even insurance, whether for your home, car or health. Renegotiating your credits and insurance can be a source of savings.
If you are no longer loyal to a company or that period is about to end, also take the opportunity to negotiate other services, such as telecommunications or electricity, to get discounts on the monthly fee and save some money.
Renegotiation of credits: rules in force
Do not forget that, until December 31, 2023, your bank must allow the renegotiation of the mortgage loan if your effort rate reaches 36% or if there is an increase of five percentage points.
If your effort rate exceeds 50%, banks must submit a renegotiation proposal.
This renegotiation may imply the credit term extensiona credit consolidationO request for a new credit or even to interest rate reduction during a certain period of time. What cannot really happen is an increase in the interest rate.
Furthermore, this process of renegotiation cannot be subject to commissions or other charges. The suspension of the commission for early amortization of the loan is also provided for in this diploma.
Review of insurance policies
The beginning of the year is also a good time to review the conditions of your insurance policies and compare them with other offers on the market for similar coverage.
Do you really need that health insurance? There may be toppings that you do not use. Haven’t you had accidents lately and never renegotiated the amount of your car insurance? So, it’s time to do it.
Nothing better than a new year to give you an extra incentive to save. You can use the Christmas subsidy you received in the previous month only and only to create an emergency fund.
If you already have your nest egg for an eventuality, start saving with a view to another goal: a trip, paying for the next summer vacation, college expenses for your children, or making a Retirement Savings Plan (PPR). Having a goal will give you the motivation you need to save effortlessly and without going back.
Invest: generate money with your savings effort
Your savings can grow a little more if you start investing in the financial markets to generate more money. From traditional term deposits, Savings Certificates and capitalization insurance to mutual funds and shares, there are several types of products in which you can invest.
It all depends on the risk you want to take and the time you want to make the investment. The greater the risk, the greater the return you can expect.
Set priorities and be realistic
Getting the accounts up to date and keeping them that way implies constant budgetary control. And it’s easier to do that control by setting financial priorities.
Want to change cars for the year? Moving home? Or simply increase your financial cushion? Do not forget that you must be realistic about the amount to allocate to these objectives and about the time needed to have the money you want.
Manage your budget well
Managing the family budget well helps you keep your accounts up to date and alerts you when there are deviations. We suggest you use two formulas practices for managing your budget and limiting access to credit.
This rule suggests that your monthly budget should be divided into three parts for the following purposes:
- 50% for fixed and essential expenses (rent, food, transport, water, electricity, gas, telecommunications);
- 30% maximum for non-essential expenses (restaurants, clothing, travel, shows);
- 20% minimum must be saved or used to pay off debts.
The purpose of this rule is to limit access to credit and reads as follows:
- 28% of income is the maximum percentage for fixed expenses related to the house (which includes expenses such as rent, interest, taxes, and insurance);
- 36% of your income is the threshold for debt (eg home loans, car loans, credit cards).
Keep your finances organized
Being organized gives you more peace of mind and control. To do this, we suggest that you start by making a list of all your expenses, their amount and due date.
Don’t forget to also write the justification for each one. You may conclude that, after all, waiving this or that expense is the right decision.
Activate direct debits or schedule transfers
For fixed expenses, you can activate direct debits, for example, for water, electricity, gas, telecommunications, or even for paying taxes. It is not worth taking the risk of missing the date and having to pay increased interest.
You can also schedule periodic transfers for expenses that you should also not forget to pay, such as rent.
Make use of personal finance apps
Reminders in your cell phone’s electronic calendar or in your e-mail are excellent memory aids for that payment that you really can’t miss, such as taxes.
Still, don’t forget that there are personal finance apps that can help you manage your financial life.
Article originally published in December 2020. Last updated in December 2022.