A brand new year is a great time to start building wise habits. When you’re making this year’s resolutions, try setting some goals that focus on your finances. Here are five personal finance strategies to get your new year started on solid footing.
1. Get Organized
Leave last year’s habits with last year’s bills, and start the new year by organizing your finances. If you’re paying bills with checks, clean out a desk drawer or set up a folder system so you have one place to store your bills and receipts. Keep any tax-related records and receipts in one place, too, so you’re not scrambling to find paperwork at tax time.
Better yet, try out a financial software app that lets you snap photos of your receipts so you can keep track of where your money goes each month.
Book a monthly appointment with yourself to review your bills and decide on strategies for keeping debt to a minimum. If you haven’t gotten your free credit report in the past 11 months, do it now. Then set goals for how you can improve your credit score over the next year.
2. Reign in Your Holiday Bills
It’s common to suffer from post-holiday blues once the credit card bills start arriving in the new year. Instead of procrastinating, make a financial resolution to tackle them head on. Open those bills immediately and start paying them down right away. If you need some motivation, look at how much you’re being charged in interest each month, and think about how you could spend — or save — that money after your gift-giving debts are erased.
3. Resolve to Save More
Most Americans are not saving enough for retirement. Whatever you may be putting aside already, consider paying your future self a little bit more by increasing your weekly or monthly savings by at least a percentage or two. Ideally, you want to have saved between eight and 11 times your annual salary when you’re ready to retire.
Review your 401(k) plan to ensure you’re investing enough to get your employer’s maximum match. Every dollar your employer matches immediately doubles your investment. In 2017, you are allowed to put up to $18,000 into your 401(k) plan, plus an extra $6,000 if you are age 50 or over. If you’re self-employed, you can contribute up to $5,500 to an IRA or a Roth IRA — and up to $6,500 if you’re 50 or older.
4. Spend Less Each Month
Look for ways to save on your monthly bills. Cable, phone and internet services can often be bundled with the same provider for a discount, as can car and home or renter’s insurance. If you choose not to bundle, it’s still a good idea to call every few months to find out if your provider is running any special discounts that may save you money. If you’re a homeowner, you may be able to cut another chunk of change — your private mortgage insurance. Check to see if you’ve exceeded the 20 percent equity requirement that will allow you to drop those PMI payments.
5. Automate, Automate, Automate
Saving money in the new year will be much easier — and more efficient — if you set up an automatic withdrawal plan. If you don’t have an employer-based savings program, check what additional savings options your bank offers. You can probably set up monthly automatic transfers so that a designated amount is sent to a separate savings account before you have a chance to spend it.
If you haven’t already, go paperless by setting up automated bill paying so that monthly bill payments and charitable contributions are automatically withdrawn from your bank account. Not only does this ensure you never miss a due date, it removes the hassle of sitting down to do your bills manually each month.