As the year comes to a close, many of us are looking ahead and mapping out our goals for the New Year, resolving to make it even better than the last.
Throngs of us are making lists and goals, both professional and personal, in order to improve our lives. Everyone wants to lose those last five pounds, improve their relationships, and achieve more work-life balance. But one area that’s missing from the conversation is your financial life.
Often your financial goals can be masked under professional goals like, “I want to make more money”. But there are ways you can improve your finances in 2015, with clear and simple strategies.
Here’s a month-by-month guide to improving your finances in 2015. Take these simple actions each month and at the end of the year you’ll be well on your way to success!
(Feel free to print off this article and keep it as a guide throughout the year.)
Create a monthly budget for the rest of the year. A budget is essentially a spending plan that focuses on your income and expenses. To get started, look at your take home pay to see how much money you’re bringing in. It’s key to look at take home pay, and not your general salary, so you know what you are actually bringing home each month.
Once you know how much you make per month, look at your fixed expenses like rent, utilities and food. Come up with a budget number that is realistic and based on current numbers as well as your behavior. After looking at your fixed expenses, look at irregular expenses like entertainment, travel, etc.
For a budget to work, your income should be greater than your expenses. If your expenses exceed your income, you’re headed for financial trouble, either by depleting your savings to cover expenses or by going into debt.
Find areas to cut back, but make your budget work for you. It’s a flexible thing, and should be a guide — not something that feels restrictive, or constraining.
While it’s still early in the year, get a financial check up by receiving a copy of your free credit report. By law, you’re allowed to get a free copy of your credit report once every 12 months.
Simply go to AnnualCreditReport.com and get your completely free report. Be sure to check over any errors or inconsistencies, as your credit report can affect your ability to get a loan, get a credit card, and more.
Commit to make saving money a habit for 31 days. Saving money, like anything else, requires practice and persistence. Choose any of these fun ways to save every day in March so you can jumpstart your savings goals.
- Save the same dollar amount as the date (March 1 = $1, March 2 = $2). Do this for 31 days and save $496.
- Automate savings through direct deposit or your online bank, then each time you get paid transfer at least 10% from your checking to savings account.
- Cut out one small habit (like going out for coffee) for a month and save the money you would have spent.
Saving is an important part of your financial health. But let’s face it, spending is usually much more fun than saving, so you might need a little creativity to make it more appealing. Once you get in the habit, saving money is second nature.
Now that your taxes are complete, take a look at your tax withholding. Did you get a nice refund? If so, you’re giving the government an interest-free loan, when you could have that money working for you in an interest-accruing savings account.
Taxes are a hard balance, as you don’t want to owe, but if you get a large refund it means you’re paying too much. Evaluate your current tax situation and see if you need to change anything for the next year.
Investing is a key part of a long-term financial strategy and can help beat out, or at least match, the cost of inflation. If you haven’t started investing, begin by maxing out your retirement.
Next, look into easy-to-use options, like Betterment.com, that take out the hard work of investing. You don’t need a lot of money to start investing, and particularly with Betterment, their advanced algorithm can help you get the most returns.
You can also look into other investment brokerages and plans, but the most important part is to get started.
As summer approaches, commit to increasing your income. Making more money can help you reach your financial goals faster and help boost your confidence. You can do this by:
- Asking for a raise and showing your deliverables and outcomes
- Find a side hustle, like becoming a contractor, pet sitter, etc.
- Sell unwanted items on Craigslist or eBay
In the middle of the year, it can be easy to lose sight of your financial goals. In the summer, it’s even easier to spend recklessly and enjoy friends and the weather. To keep your finances in check, go on an all cash diet in July.
An all cash diet means you only use cash for expenditures, which helps lessen your reliance on credit cards. If you’re currently in credit card debt, it can feel like you are on a never-ending hamster wheel and can’t get off.
The only way to cleanse your finances, and start over, is to stick to cash. People spend less money when they stick to cash — it’s been proven time and time again.
Not only that, but you have a physical relationship with your money and can see when it’s depleting. It’s easy to swipe thoughtlessly and not think about the bill until the due date. A cash diet can help you reclaim control of your finances and get you out of debt.
After going on a cash diet, commit to paying more money towards your debt. If you have student loans, a car loan, credit card debt, or a mortgage, pay more than the minimum.
First, look at your debt totals and see how much interest you are being charged per month. Then calculate your debt free date. By paying more towards your debt, you will move that date closer, so you can focus on other financial priorities.
Start September by finding ways to slash your expenses. Try negotiating a bill with your internet, cable, or phone provider. When it comes to entertainment providers, they would rather keep you, than have you cancel, so you have the control.
Also find ways to lower your food budget by buying in bulk and meal planning, or commit to take public transportation and biking to work where possible. What else can you do to lower your expenses?
Don’t be afraid to experiment and find new alternatives to getting what you want without paying for it.
Before the holidays approach, implement ideas to save money and time through meal planning and batch cooking. I’m more likely to go out if I’m busy and stressed, as I’m sure you are as well. But with a little preparation, you can plan your meals in advance, and cook our food in batches.
Look at a month of dinners using Real Simple’s website, or 5dollardinners.com and do your prep throughout the week, and batch cooking on the weekends.
November is a great time to write down what you are grateful for. Our money mindset affects how we spend money, how we save, and how we perceive and react to our financial situation. The best way to change your money mindset is by focusing on gratitude.
Be grateful for what you already have, not resentful for what you don’t have. Write down what you’re grateful for, like having a roof over your head, a healthy meal, etc. This is a simple, yet effective tool to change your money mindset and focus on building wealth over the next month.
Donate to your favorite charity and get a tax deduction before the year ends. Write down your values and look at your expenses. Does your spending align with your values? If not, what can you change?
Your money should reflect your values, so that you can afford to spend lavishly on the things you love. In December, focus on planned giving, preparing year-end financial documents, and re-assessing your values and budget.
This guide will help you achieve multiple financial goals and aims to be a starting point — remember, this is flexible, and should change as your life changes.
Instead of committing to resolutions you’ll likely fail to complete, choose to take one small action each month year. The main point is that your finances require care, just like the rest of your life, so make sure you are giving them attention this year.
Are you ready to make 2015 the best year ever? Which month’s actions are you looking forward to most?
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