A Fresh Start: Make This Year the Year You Gain Financial Control
The great thing about the beginning of a new year is that it can serve as a fresh start for a lot of things—including your finances. It’s the perfect time to assess what has worked and what hasn’t, as well as an opportunity to check in with your financial priorities and goals.
Now is the time to lay out your financial plans and goals for the next 12 months and beyond. Sound like a strenuous task? Don’t worry—we have a few tips to help you set and stick to a plan.
Track your spending
Start by gathering all your statements, receipts and withdrawals from the past few months. Organize essential spending by category—like food, shelter and clothing—and note how much you spend monthly for each. Don’t forget to include quarterly or annual expenses in your list too.
From there, add up your monthly income and deduct your expenses. The money left over is what you have available for paying off debt, savings, entertainment and other nonessential things. If you have a negative number, that means your expenses exceed your income. Determine if there are areas where you can cut back or reduce expenses so the amount going out each month doesn’t surpass the amount coming in.
By understanding how much you spend and where you spend it, you’ll be able to create a budget and set a strong foundation for your financial future.
Review monthly
Once you've tracked your spending for a few months, set a monthly appointment with yourself to review what you’ve learned. Ask yourself questions like: Am I making progress on my financial goals? Do I need to adjust my budget? Where can I cut unnecessary expenses?
If you're married or sharing living expenses with someone, ask them to join you in this review. It doesn't have to be boring or stressful. Cook dinner, put on some jazzy music and make it a fun evening!
Anticipate the unexpected
It's an unfortunate reality—life will throw a curveball at you when you least expect it. Sometimes it's a positive curveball, and sometimes it can be more challenging. Regardless, aim to have cash set aside for the unexpected.
To get there, decide on an amount you're willing to save from every paycheck. Then set up an automatic transfer in that amount that goes into a separate account just for emergencies. Start with as little as $25 and increase it every few months—you'll be surprised at how quickly your rainy day fund grows.
Use apps to make it easy
People aren't budgeting the same way their parents did. Even though using your bank statement to reconcile your accounts is still a tried and true method to keep track of your money, technology is a great tool too.
There are countless financial apps to help you track your spending, pay bills, contribute to savings and more. You can even do it while binging your favorite television show! Before you sign up, do your research and find out which financial apps work best with your financial institution.
Set up alerts
Set up account alerts through your bank's app or text messages to get real-time updates on your spending. These notifications do double duty—they help you catch potential overdraft situations before they hit your wallet with fees, and they make it easy to spot suspicious transactions quickly.
Tackle your debt
Most Americans carry some level of debt. This year, aim to tackle that debt so your money can go toward your wants and needs instead of interest fees. Reducing your debt has many advantages: it will increase your credit score, decrease your overall expenses and help you move forward with your financial goals.
Choose a debt repayment method and stick with it. The snowball method tackles your smallest balances first—pay minimums on everything, then put extra money toward the smallest debt. Once it's gone, roll that payment into the next smallest balance. The avalanche method targets high-interest debts first to save money long-term. Both work, but consistency matters more than which method you pick.
Don't forget to use your rewards
When used responsibly, rewards credit cards can be the workhorse of a budget. Whether you prefer cash back, gift cards, entertainment discounts or travel rebates, earning valuable rewards from your everyday spending is a bonus that shouldn't be overlooked. Keep track of all your rewards programs and check your balances monthly so you're ready to use them when the right opportunity comes along.
Save for retirement
You deserve to have a happy and financially secure retirement—no matter how far away that day may be. Now’s the time to figure out how much you have saved, how much you think you’ll need to live comfortably and how you can increase your savings.
Ask yourself these questions: Do you have a 401(k)? Does your employer offer a matching contribution? Do you have an IRA or Roth IRA? Are you maxing out your contributions every year? Evaluate your plan annually—on your own or with a helpful financial advisor. Your future self will thank you.
Consider investing
Once you’ve gotten to a point where your budget comfortably covers your monthly expenses, you can start to invest even more. In addition to retirement accounts, consider expanding your portfolio by investing in stocks, bonds, mutual funds and more.
Budget for fun too
When all is said and done, you deserve to have some fun with your money so be sure to budget for it. You know you've done a good job with your budget when every dollar has a job and some of those dollars are going toward experiences that give you joy. Don't forget to spoil yourself every now and then!
Another financial tool
Mountain America also offers another valuable free financial benefit—our financial guide program. Make an appointment to chat with a financial expert—you don’t even have to be a member. Get help creating a budget, improving your credit score, planning for the future or paying off debt. If you're not sure where to start or what financial goals to prioritize, they can help you figure that out too.
ÂSchedule a confidential meeting today and get started!
