The move from one year to the next gives us a chance to draw a line and create a boundary. Of course, most New Year’s’ Resolutions are abandoned pretty quickly.
But that’s because they don’t have a real strategy behind them. When it comes to your money, it’s not that difficult to create that strategy at all. Here, we’re going to look at the options you should start adopting through the year so you can keep that promise to yourself of being better with your money.
Know where your money is going
From the very first day of the year, it’s time to start tracking your expenses. Whether it’s on a notepad that you carry absolutely everywhere or using a free expenses tracking app, you should start looking at your costs in the most possible detail. Check your bank accounts and credit records to account for any you don’t make yourself. Create a budget, using the 50/30/20 rule as a baseline and compare it to your expenses. Figure out where your money’s going, where you could stand to put a little more and where you really need to spend a little less. If you want to be good with your money, the first step is finding out just how bad you are with it already.
Make savings the first thing
The ‘20’ part of the 50/30/20 budget is savings for financial health improvement. It could be paying off debt or finding investments. One of your savings goals should most definitely be starting an emergency fund to take care of life’s little problems. But the problem that a lot of people have with savings is that they put it off. They decide to leave themselves some extra money, only to find that they don’t have the money to leave at the end of the paycheck. Pay out your savings first, then your essentials, then consider the rest free money. That way, you’re never neglecting your strategies towards better financial health and leaving your piggy banks perpetually empty.
Get the insurance you need
An emergency fund can be a good protective barrier against some of the problems that life can throw your way. But it’s not the best way to deal with all of them. There are some assets and preparations that can be better made with the right choice of insurance. We’re not just talking about the mandatory kinds like auto insurance. For instance, you need to be well aware of the risk of disability or injury taking you out of work beyond what your worker’s compensation can provide. For that, disability insurance needs to be considered. Then you need to think about your family and dependents. If you were to die, do you have life insurance in place to help them make it through it?
Get real returns on your savings
Whatever your savings goals are, they’re going to get met a lot more easily if you’re using the right savings methods. It’s not enough to just sit on your money. You want it to experience some sort of growth, especially since the risk of inflation catching up to bank interest is always a possibility. For real gains, you want to consider getting into some investment opportunities. But if you’re not ready to take that plunge just yet, just find the best savings return accounts. We’re talking about options like savings bonds and peer-to-peer lending. These terms might sound intimidating to new wealth builders, but they’re nowhere near as risky as investments like getting on the stock exchange.
Move your debt to your advantage
Being in some form or amount of debt isn’t something to be overly ashamed for. Most of us deal with debt at some point, it’s just a fact of life. Ignoring it can only compound the problem. Taking a proactive approach isn’t just 
about paying it off as quickly as you can. It’s about paying it off realistically without having to go to dire straits to do so. To that end, moving the debt around to a deal that’s better for you is often the wiser option. Sites like LendingTree can help you formulate strategies using debt consolidation that can reduce your monthly payments to make them a lot more manageable. If you’re in the position to pay debt off quick, great. If not, then focus on making it achievable above all else.
Talk to your family about money
This is a biggie. We know that it can be difficult to share the ins-and-outs of money difficulty. If you don’t explain why you’re cutting certain expenses, it can lead to arguments. If you’re feeling ashamed, you might not want to say anything. But talking about money is important. If you have a partner, then they can be a great asset in helping you. If you have kids, then it’s a valuable lesson they could take with them, rather than picking up bad habits that get you and them into financial difficulty in the first place. The best way to talk about money with them is by looking together at the strategies and steps you’re using to get in a better financial position. It keeps the conversation positive while being realistic about the risks.
Max out your retirement savings
No matter what your situation is, you want to be contributing to your retirement. Even if you’re paying off debt, just sneak a bit here and there into your long-term preparations. Over time, every little bit contributes to a much greater whole. They can contribute even better if you max out your retirement contributions. A lot of employers offer 401(k) options. If they do, then try to contribute as much as they’re willing to match. You don’t know how long you’ll have the opportunity to capitalize on a benefit like that.
Automate your payments
We mentioned right up at the top that the best habit to maintain is to pay towards your savings strategies first. There’s no doubt about that. But it’s even better if you ensure that all your bills are going out first, too. Automating is a good idea to make sure your expenses aren’t chewing into your essentials. A lot of people have a problem with automating because, as they say, out of sight is out of might. But it’s easy enough to keep track of all those bills with a bit of a visual reminder to help. Draw yourself a financial network map that changes with every added bill and paid off debt. That way you can automate without worrying about forgetting it.
Take a once over of your expenses
As for those expenses, you can stop them from chewing away too much by simply creating a few rules to deal with them. For example, set reasonable boundaries for how much you’re willing to spend on an item. Do you need to buy a pair of baby shoes that costs more than $15? These boundaries get you thinking a lot more frugally. Then look at your bills, as well. Every now and then, every year or six months, you should take the time to look over them once more. Using sites like Billfixers to see if you can’t negotiate with your service providers to see if you can’t haggle them down a bit. Don’t assume that the bills that were best for you two years ago are still best for you now.
It might seem like a good deal of effort, but it’s easy to maintain good money habits once you get into them. Even better, it really improves your understanding not only of how your money works but how your mind works with it.
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