New year, new you — it’s time to write down those resolutions. Money can be a source of both joy and stress, and it’s something we may feel like we have limited control over. If you start small, however, it will be a lot less daunting. To start the new year off as best as you can, make some room for a money makeover. Put these financial resolutions in your back pocket for a healthy, happy and money-saving new year.
Before you can make progress toward your financial resolutions, you need to identify what they are. Are you trying to pay off a student loan? Maybe buy a home or a car? Once you’ve narrowed down big-picture goals, you can take steps toward attaining them. Write it down somewhere and hold yourself accountable for making it happen.
The best way to begin any sort of financial goal is to get a handle on your current expenses. And one of the easiest money-saving tips to start now is to create a budget. Track your spending each month using budgeting apps and programs you can download on your computer that can help you log your spending and manage your expenses better. You can always bust out the old calculator and a notebook to track your money, too.
You work too hard not to see the reward, so pay yourself first. Every paycheck, transfer a set amount — say $40 — into your savings account. Even $40 once a month means $480 at the end of the year. Of course, this does mean you’ll have to cut down on other expenses to allow yourself a personal savings account.
After dropping some cash in your rainy-day fund, take care of your monthly bills before any luxury expenses or impulse buys. This can be a helpful budgeting strategy to give you a better idea of what you can actually afford and what you can’t. Paying your bills soon after payday also helps you steer clear of late payments, which is one of the ways you are damaging your credit score.
Starting the new year with goals such as wanting to pay off your entire debt is one of the most common New Year's resolution mistakes. It might be unrealistic and will set you up for disappointment. Instead, start with fast-tracking the process of paying off your debt. For the first few months of the year, put down an extra $50 a month or so to your debt bill, which can include your student loans, your car payments, credit card debt or anything else you owe money on. The extra amount you pay toward your debt depends on what you’re earning and where else your money needs to go, so set some time aside to figure out the logistics.
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This is an obvious financial tip: don’t spend more than you make. It is easier said than done when you have bills to pay, rent to make and food to eat. If there are things beyond your needs that you can’t see yourself cutting out, don’t sacrifice your savings. Instead, cut out what you can and find a way to earn more money.
At the start of the year, ask yourself if there are small things you do every day that cost money. Some daily things aren’t as easy to save money on, like commuting to work or school. But things like getting Starbucks every morning and going out to eat are more in your control. For example, if you stop at a coffee shop every day, you’re likely spending an average of $3 for a cup of joe, according to market research firm NPD Group. Trimming just $3 from your daily spending saves you $1,095 a year.
A credit score is an important factor of your financial life and it’s not an overnight feat to improve it. It takes time and patience. A credit score reflects credit payment patterns over time, so paying your bills on time is the most important step to improving your score. Inversely, paying your bills late or having an account referred to a collections agency for a lack of payments can negatively affect your credit. The Federal Trade Commission recommends that people focus on paying their bills in a timely manner, paying down any outstanding balances and staying away from new debt.
Ask yourself if it’s really worth the added cost for a monthly gym membership. According to a study conducted by the Statistic Brain Research Institute, an average monthly gym membership in the United States costs $58. To save some money, cancel the gym fees and head outdoors for a run — or stay indoors for a total-body workout. This resolution can easily become a two in one — save some cash and get fit.
Set a goal to do some home projects in the new year, such as changing light bulbs or resetting your thermostat. You can save money on your heating and cooling bills by using a programmable thermostat to automatically adjust the heating or air-conditioning. According to the U.S Department of Energy, you can save as much as 10% a year on heating and cooling by simply turning your thermostat back 7 to 10 degrees for eight hours a day from its normal setting. Likewise, changing your light bulbs to LED can help your monthly utility costs go down. Quality LED light bulbs use 75% less energy than traditional incandescent bulbs, and they last 25 times longer, per the U.S. Department of Energy. These small, but valuable changes will help you save money throughout the year.
Try eating out less because that’s likely where you’re spending the most and it’s where you’ll be able to save the most, too. According to a report released in 2019 by the Bureau of Labor Statistics, the average American household spends nearly $3,500 on food outside of the home each year. Resolutions don’t work unless they’re attainable and practical, so instead of trying to eliminate take-out and restaurants completely, allow yourself just one or two days a week of eating out and find recipes that work for your busy schedule for the rest.
Getting rid of cable can also help you stretch your monthly budget with endless streaming options for so much less. According to recent data collected by consumer research firm Leichtman Research Group, Inc., the average cost of cable is up to $107 a month. If you think about how much cable TV you actually watch on a regular basis, you might realize you could do without. Streaming services like Netflix, for example, cost only $9 per month for a basic plan.
Along with cable and that gym membership, also look to see if there are any other subscription services you signed up for but don’t plan on using. There are dozens and dozens of TV and movie streaming services, music subscriptions, meal delivery kits, monthly subscription product boxes and more. Do you really need all of them? Eliminate the ones that you use the least and be mindful of how often you use the rest.
If you have an employer that will match your contribution to your retirement fund via a 401(k), start now if you have not already. The “match” is essentially free money, even if you don’t reap the rewards right away. A 401(k) effectively increases your income without increasing your tax bill, since you can choose to pay no taxes on matching contributions until you withdraw them when you retire.
Most of us spend the most money over the weekends — brunch, errands, movies, manicure, car wash — and the list goes on. Dedicate at least one weekend of the month as a “no-spend” weekend and get creative instead. Head to a free event in your neighborhood, cook dinner with ingredients you already have in your pantry or maybe even clean out your closet. It is the new year, after all.
To manage your money better, you need to know more about it. Pick up a finance book and start simply by reading just one page a day before bed, on the train or bus or during some downtime. Take notes about improving your personal finances as you flip through it and you’ll not only have more knowledge on a rather complicated topic, but you’ll also be inspired to apply it.
Along with reading about financial topics, increase your money know-how by regularly listening to a personal finance podcast. There are plenty to choose from depending on your lifestyle and what area interests you most. You can listen to ones that are focused on investing or ones that cover the basics of managing money. The podcasts that give personal finance advice will be the most helpful.
Monitoring your physical health is helpful in maintaining your financial well-being. If you head to the doctor at the start of the year, you can potentially catch any medical issues as early as possible, which will be a lot cheaper than a sudden visit to a convenient care or emergency room. Your employer, private or government health insurance should cover most or all of any preventive care visits, like an annual physical.
Finding a new job is way easier said than done. But if you think your current salary isn’t quite supporting your expenses and lifestyle as well as it could, it might be time to re-enter the job market. There are some jobs that pay really well that you might not even have to go back to college for.
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