January is (in)famous for bringing a variety of financial challenges after the holiday cheer and excess is over. But now that February is here, it’s time you leave those money problems behind and take control of your bank account again.
We’ve collected some very useful tips and tricks on how to improve finances that will help you get back on your feet financially, not only for a while, but for the rest of the year, and hopefully further into 2020. Let’s get to it, then!
Don’t Make the Big Picture the Only Picture
Let’s say your goal for next year is to save for your children’s tuition or the down payment for a house. That’s a several-hundred-thousand dollars goal, and yes, it sounds terrifying saying it out loud. The thing is, however, that you won’t reach that goal all at once, so don’t focus on it in the same way.
Break it down into small steps. Make a monthly budget with different goals depending on your sources of income. Calculate what expenditure will save you that much money if you cut it. The idea is to tackle the problem in different small ways so you won’t feel overwhelmed every day and make a bad decision down the line.
Learn to be mindful of your spending
Think of what a typical day for you means in terms of spending. Coffee shop in the morning? Ordering lunch for work? Checking out some online bargains on your downtime? Many of us incur in all kind of expenses without realizing it, but you can change it with a zero dollar day.
Zero Dollar Days are normal days where you try not spending a single dollar. This is not supposed to turn you into a miser at all, however; ZDDs are supposed to show you all the situations where you let go of money, how that adds up, and then make you more mindful of your spending. Plan for lunch, take advantage of office coffee, carpooling or biking to work, and family or couple activities at home for entertainment.
Treat it as a periodic learning experience instead of a daily habit, and you’ll feel the rewards soon.
Saving and budgeting go hand in hand.
“Make a budget” is the most often heard advice for everyone trying to cut down expenses, but how do you start budgeting? Well, it’s simple. Take your total monthly income, then start subtracting your monthly expenses, such as housing, utilities, groceries, etc. If the final number is too small for comfort (or worse, negative), it’s time to make some changes.
Go back to that list of monthly expenses and make some sensible cuts. Start with the smaller things, such as cooking at home and planning your weekly lunches, or depending less on your car for going everywhere. It all depends on what kind of lifestyle you have, and there are plenty of apps out there that can help you manage all of the variables that go into budgeting, so try out a few and make a habit out of it!
Consider boosting your retirement contributions.
Your goal is to save 10% to 15% of your yearly income towards retirement. Yes, it’s a substantial amount, but it’s well worth it considering why you need it. There are plenty of ways to save that money, such as setting up a 401(k) if your employer offers it, or a regular IRA or Roth IRA if they don’t. Get a SEP IRA if you’re self-employed.
2019 is the year to set that fund, because retirement contributions are increasing, and depending on your situation, you’ll be allowed to save up to $500 more a year compared to 2018, or $1,000 for adults over 50. The options are plenty, start saving!
These are all sensible habits on how to improve the financial position that you can start in 2019 that will improve your financial situation year by year, and hopefully, the only thing you’ll have to worry about every January will be who cleans after the New Year’s party.
