Ways to Start the New Year Off on the Right Financial Foot.
While the new year is a time for resolutions, it’s also great to get your finances in order. While there are many ways to spend less and save more this year, here are some proven strategies for getting out of debt and starting 2019 off on the right financial foot:
1. Renew your commitment to the budget you set last year
Make sure to revisit your budget. If you haven’t read it in a while, now is the time to do so. You may find that some of the numbers need updating and if that’s the case, take some time to make those changes.
In addition, it’s important that you are still getting the most value out of your budget by looking at how much money you are saving each month and whether or not you can use this money for something else. If there is no benefit from what you have set up, then it might be wise for you to change things up!
2. Start saving money
- Save money by cutting back on entertainment expenses.
- Save money by cutting back on eating out.
- Save money by cutting back on shopping.
- Save money by cutting back on travel
. Save money by cutting back on entertainment expenses. Save money by cutting back on eating out. Save money by cutting back on shopping. Save money by cutting back on travel
3. Set a new, financial goal for yourself
Now that you know what your current financial situation is, it’s time to set a new, financial goal for yourself. Here are some questions to help you get started:
- What is your current financial situation?
- What would be the most beneficial change in your financial life?
- How can you achieve that change?
Setting a goal is easy—the hard part is committing yourself to it and following through with actionable steps toward achieving it. Having a clear picture of where you want to go will make all the difference in how quickly (or slowly) you get there!
5. Put in place automatic savings deposits
There are many ways to put your money to work for you, but sometimes the best method is one that requires no action on your part at all. This can be especially helpful if you’re busy or just not good at saving money. If that sounds like you, then you might want to consider setting up an automatic savings deposit into a low-risk investment account like a CD or a money market fund. You can also automatically increase your 401k contribution and pay bills such as credit card debt and student loans on time each month without thinking about it too much!
6. Pay down credit cards
- Pay down credit cards with the highest interest rate first.
- Pay down cards with the lowest balance first.
- Make a plan to pay off your credit card debt. No more than 20% of your income should go toward paying down debt, and that’s if you’re only using it for emergencies! If you have money left over at the end of every month after making payments on everything else (housing/food/etc.), put it into an emergency fund and start saving for retirement or another big goal instead of wasting it on high-interest loans. This will help keep you from being stuck in a cycle of borrowing money from yourself just so that you don’t miss out on something fun!
7. Increase your 401(k) contribution
If you’re not maxing out your 401(k), this is a great time to change that. Increasing your contribution will help build your savings and set yourself up for retirement. If you’re already contributing all you can, try increasing it by 1% or 2%. You may be surprised by how much more money you end up with in the long run!
How much should I contribute? The maximum annual employee contribution for 2018 is $18,500 (up from $18,000 in 2017). If you are 50 years old or older as of December 31st, 2018, an additional “catch-up” elective deferral of $6,000 may be made on top of the standard limit—for a total limit of $24,500 (in addition to any employer match).
Take the time to review your finances.
Now that you’ve got your resolutions, it’s time to take the time to review your finances. We’re not talking about going through every single credit card statement from 2018 and figuring out where every penny went, though that would be a great exercise for your brain. Instead, spend some time reflecting on how much money you made last year and where it went—what expenses were unexpected? What do you want to happen next year? Make a list of all the things that happened in 2018 and how they affected your overall financial picture.
Make a budget based on those expenses (and anything else you need help with). If there are areas where money is being wasted or going toward things it shouldn’t be going toward, create goals around fixing those issues. For example: if groceries are costing too much each month, create a goal of reducing grocery spending by $50 per month over the next 12 months so that at the end of those 12 months, this expense will have decreased by $600 total since January 2019!
Once these goals have been established or adjusted as needed during this process, put together an achievable plan for achieving them by following all these steps (and maybe even making some helpful hacks along the way). Put aside any resentment for having had too many nights out last year; now is when we’re going to fix what needs fixing so our wallets can come back into balance! Reviewing finances regularly throughout 2019 means never letting yourself forget about what matters most financially—your family!
8). Set money goals.
Setting money goals is an important part of achieving your financial independence. If you want to get rich, you need a plan. You can’t just sit around and wait for the dollar bills to fall in your lap—you have to work at it!
But before we dive into the nitty-gritty of setting up your own personal finance goals, let’s start with a few ground rules:
- Set realistic goals. Don’t be too ambitious or too modest; think about what would really allow you and/or your family to live comfortably without having to worry about money every day of their lives (or at least until they retire).
- Write down all of your goals on paper so that they’re clear in your mind and easy for others who may help keep track of them (like coworkers) to understand as well.
- Make sure each goal is specific (“I want my car paid off”) rather than vague(“I want less debt”). Be specific about how much money will be required when accomplishing these tasks—are we talking about the total amount spent? Monthly payments? Yearly payments? Make sure each goal has an end date too; otherwise it might not feel like something worth working towards!
9). Create a budget that works for you.
- Create a budget that works for you.
- Make sure you have all your expenses accounted for.
- Make sure you have enough money to cover your bills and expenses.
- Make sure you have enough money for savings, investments and emergencies
You may not know it but you have a lot of expenses! Even if you live with your parents or have roommates, there are still many things that cost money. For example, most people don’t think about their cell phone bill when they are budgeting but it can be one of the biggest expenses. So why not make sure you know all the expenses and then see where you can cut back?
Automation is the key to keeping money on track and off your mind. We’re not talking about robots here, but rather setting up automatic payments to bills and automatic deposits into savings accounts. Make sure you have an emergency fund set up in a place where it’s easily accessible (like a high-yield savings account) so that you can access cash without paying fees if you need to do so quickly. If possible, automate transfers from checking accounts into retirement accounts as well.* Automate withdrawals from checking accounts regularly toward savings goals like vacations or home improvements—the less time you spend thinking about money, the more time you’ll have for enjoying life!
11). Review and reduce recurring charges.
- Review and reduce recurring charges. The first thing you should do before the new year is taking a close look at all of the monthly payments that are automatically deducted from your bank account to see if they’re still necessary.
- Stop paying for things you don’t use, or services that aren’t worth what you’re paying for them; this includes subscriptions like Netflix, HBO Now and Spotify Premium – unless you plan on using them regularly. You could always subscribe later when there’s no set term or contract in place (which may be difficult depending on how far along your current subscription cycle). Or maybe just try free alternatives instead of paying for premium content such as YouTube Red ($9/month), Hulu ($8/month) or Amazon Prime Video ($99/year).
- Do an audit of all monthly bills: utilities such as electricity, phone service and internet; credit cards (which should be paid off every month); even things like car payments or gas expenses can add up over time because they’re not necessarily seen by consumers as “entertainment costs” but rather necessities required to maintain a safe lifestyle.” This exercise will help identify ways in which unnecessary expenses could be cut out altogether so that more money can go toward savings accounts instead!
12). Review your credit card balances
You’ve probably looked at your credit card statements by now. And if you haven’t, what are you waiting for? Go ahead and check them out. As the New Year approaches, it’s time to take a good look at your balances and how much money they’re costing you in interest payments every month.
The first thing to do is pay off the card with the highest interest rate first—this will save more money in the long run than any other strategy (though admittedly it can be hard to get motivated when facing down a huge balance). If this is impossible for whatever reason (you just don’t have enough cash lying around), then consider making an affordable monthly payment plan with them instead.
If neither of these options is feasible, consider transferring some of your balances to lower-interest cards. Just make sure that if you do this, they’re not ones where late fees or annual percentage rates will apply—otherwise no matter how low their initial APR may be going forward, it won’t mean anything once they start adding up!
13). Start investing.
You’re going to be doing a lot of things in 2019. You may start a new job, move to another city, or get married. But one thing you should add to your list is investing.
Investing isn’t just for the rich; it’s for anyone who wants to put their money to work and grow it over time. So why not give it a shot? Here are some tips on how exactly you can do that:
14). Pay off debt.
Pay off debt. The first thing you should do before you start the new year is to pay off all your debts—except for your mortgage if you have one. Try paying it down as much as possible, but don’t put other financial goals on hold just because of your payments. Take care of them and make them a priority, but don’t get any plastic surgery or buy a new car just because it means lower payments for now.
Your credit card balance will only go up from here if you keep taking out new loans and maxing out your cards every month, so take this time to pay back everything that isn’t essential! If there’s anything left over after all that—and there probably won’t be—put it into savings so that someday soon maybe someday actually happens sooner than later!
15). Open a high-yield savings account.
If you’ve been looking for a high-yield savings account to help you save more money and earn interest on your savings, then we have some good news: there are many different types of high-yield savings accounts in the market today.
The whole point of a high-yield savings account is that it pays more than the amount you would earn if you kept money in a regular savings account or CD.
The best part about opening one is that these types of accounts allow you to manage your finances and make sure that your money stays safe while still earning as much interest as possible from it.
16). Contribute more to your retirement accounts.
It’s time to withdraw your money from the retirement accounts that you’ve been contributing to for years. Just kidding! But seriously, you can increase contributions to your retirement plans at any time.
If you’re not sure what a 401(k) or IRA is, here are some basics:
- A 401k is a type of retirement plan offered through private companies (as well as many nonprofits). It allows employees to contribute part of their earnings on a pre-tax basis. In other words, they don’t pay income tax on the amount they contribute up front; instead, it gets taxed when withdrawn in retirement age—and only then if it’s not used for qualified expenses like tuition or health care premiums. As such, most financial experts recommend putting away at least 10% of every paycheck into a 401(k).
- An individual retirement account allows people who aren’t eligible for 401ks access to similar benefits without paying taxes until withdrawal age—which means contributing early means more money saved later on! If you want to access but aren’t eligible for an employer-sponsored plan like a 401k (or don’t want one), consider opening up an individual IRA through Fidelity or another online brokerage firm (you’ll need some cash stashed away first though).
17). Cancel unused subscriptions and memberships.
It’s easy to forget about some of the things you pay for, especially when they are automatic payments that you set up long ago. Take a look at your bank statements or credit card bills and cancel any unused subscriptions or memberships. You may be surprised by what you discover!
There are many ways to save money, start investing and use credit wisely this year!
- There are many ways to save money, start investing and use credit wisely this year!
- Save money by cutting out unnecessary expenses. Do you really need a new pair of sunglasses? How about that new cell phone case? The holidays are over, so take some time to evaluate your budget and cut out unnecessary spending. You’ll be glad when the next bill comes in!
- Save money by spending less on food. It’s no secret that eating healthy is expensive; however, it doesn’t have to be if you cut back on eating out and buy more in bulk from Costco or Sam’s Club! With these tips in mind, you can stick with your New Year’s resolution without breaking the bank this year.
So, you’ve read through the New Year’s Eve festivities and the big resolutions. You have a plan or at least an idea of what you need to do next. Now, how do you make it happen? Here are some answers to frequently asked questions about personal finances:
- What do I do if my budget isn’t working out? The best thing that can happen is that your budget doesn’t work. If it does, then why change anything? But if there are still some things that don’t feel right in your budget, try adjusting them slightly and see how they feel. Don’t be afraid to play around with different possibilities until things feel right again—and remember no one’s perfect!
- How much money do I even save a month? That depends on what’s most important for you right now. If debt reduction is high on the list of priorities (and it should be!), then more than likely saving more than 10% might not be possible right away—but setting aside even $20 per week can add up over time!
What do you do to keep your financial resolutions?
- Keep a budget.
- Pay off your credit cards.
- Invest in your retirement account.
- Set money goals, like paying off all of your debt or buying a house or car by 2020, and create a plan for reaching them (or hire someone to help you with the math).
- Review your finances periodically—it’s not just about setting goals; it’s also about making sure that they’re actually achievable! If something doesn’t seem right on paper, then it probably isn’t right in real life either, so reevaluate until everything adds up correctly (and don’t forget those taxes).
How much can I save each month?
It depends on your income, it depends on how much you spend, and it depends on your savings goals.
So let’s talk about those three things.
Is your emergency fund sufficient?
A good rule of thumb is to aim for an amount that can cover at least 3-6 months of expenses. The exact number will depend on how much you earn, what your expenses are and how much time you have until your next paycheck. And if you’re saving for retirement, the amount should be enough to cover your expenses for at least 10 years—the typical lifespan of a retirement fund.
The best way to figure out if your savings are sufficient? Start by creating a budget that includes all of your income and monthly expenses (but not automatic payments). If there’s money left over after covering these costs each month, then congratulations: You’ve got some wiggle room in case something goes wrong!
Are there any proven strategies for getting out of debt?
- When it comes to getting out of debt, there are three main strategies:
- Pay more than the minimum balance. This is a no-brainer—paying only the minimum balance on your credit card will only make it harder for you to pay off your debt in a timely manner. If you can’t afford to pay more than the minimum due, then this is an indication that maybe debt isn’t for you and you should seek advice from a professional before continuing down this path.
- Plan ahead and set aside money every month so as not to go into unnecessary credit card debt during Christmas or Easter when many people tend to spend more than they need/want/can afford.
- Avoid taking out loans in the first place!
It’s time to get your financial house in order. Start the new year off on the right foot by following these tips and tricks. Use them as a guide for creating a budget, saving money and managing credit wisely this year!