SPRINGFIELD – Lose 10 pounds? Eat healthier? Exercise more? All great New Year’s resolutions – but how about resolving to get control of your finances?
“Starting the new year with a fresh commitment to review and better manage your money is a great way to kick off 2025,” says Comptroller Mendoza. “It might be scary to take a hard look at your financial situation, but it’s the only way to get a handle on debt, save for future needs and make the most of your hard-earned dollars.”
Here are some tips to get started:
- Lay it all out there: Be honest about your money habits and get real about what you need to do to meet goals like saving for retirement, college tuition or a big vacation. Review debt and make a plan to pay off things like credit cards and cars.
- Tackle that debt: This can be as simple as paying a little extra each month, which will help save on interest charges in the long run. Think about what will motivate you…paying off smaller amounts to get that feeling of accomplishment or addressing debt with the highest interest rates. Consider transferring debt to a zero-interest card.
- Set up an emergency fund: Just like the Illinois Office of Comptroller is working to build up the state’s Rainy Day Fund, families need some cash on hand for things like unexpected home and auto repairs, losing a job or costly medical bills. It’s recommended that you have three to six months of expenses saved up, but even one month can help.
- Automate: An easy way to save is to automatically have a set amount transferred from your checking account to your savings account right after you get paid. You won’t miss the money, and these deposits will build up over time. Do the same for investments and 401K’s. Think of it like a monthly bill that is due at the same time each month.
- Create a budget: List income, then all expenses by category such as mortgage/rent, utilities, car payment, groceries, entertainment, etc. Set realistic spending limits for each category. Try tracking ALL spending – you may be surprised where your money is going.
- Cut costs: Take a look at all of the subscriptions you have, such as streaming services or apps. That “free trial” may have turned into a monthly fee you totally forgot about. This is a good time to cancel. Commit to cutting back on frivolous spending such as expensive coffees and lunches out every day.
Other tips include:
- Review your credit report: Make sure it’s accurate and report any signs of identity theft. That may include new lines of credit that you did not open or authorize. You can also sign up for credit alerts/identity theft protection.
- Check your credit score: See which areas you need to work on to get that number higher. A score below 670 is considered just “fair.” You can improve your score by paying your bills on time and reducing your credit utilization. That’s the amount of available credit that you are using. It’s recommended that you stay under 30%, so if a credit card has a limit of $10,000, aim to keep your bill under $3,000. Even better, pay off that card each month to avoid costly interest charges and potential late fees.
- Don’t have a checking account? For those who do not have a checking account, avoid cashing checks at places that charge high fees. The Comptroller’s Bank On Illinois program offers safe and affordable checking or credit union accounts to get you started.
“I hope once the whirlwind of the holidays is over, families will really take a close look at where they can cut spending, start investing and pay down debt,” said Comptroller Mendoza. “Getting your money under control now will pay off later.”
