Don’t you love a fresh start? Each January 1st brings us a new year, ripe with possibilities and opportunities. But this is only true if you view it that way! Some may view the new year as more of the same and not feel inspired at all.
If you are inspired to improve your financial life this year, here are five ways to kickstart your efforts.
Increase your retirement savings
Did you receive a cost of living raise starting this month? Then put those dollars to work before they even hit your pocketbook. Call your plan provider and increase the amount being withheld from your paycheck toward your retirement.
No raise? No problem. Just increase it anyway. Even a little bit of an increase in your contribution will help over the long-term, and an extra $10-20 per paycheck won’t be missed. You will adjust.
Increase your debt pay-off efforts
In a similar manner, scoop out an extra $10-20 per month to apply to your debt paydown. Then ask yourself if you can do more. As soon as you stop missing that money from your budget, it’s time to ratchet up the amount you’re paying towards debt again. Mindfulness and small increases in your efforts go a long way when it comes to building a debt pay-off snowball.
Cut one thing
If you are struggling to make ends meet or just feel like your budget is too tight, cut one thing. Find one thing you are spending your money on that you can live without, and just quit it. Do you buy a magazine on a whim in the grocery line? Stop it! (Or at least subscribe in order to obtain annual savings on the cover price.) Do you go out for drinks after work three times per week? Cut it down to two or even once per week. Do you stop at convenience stores several times per week for snacks? Pack your own snacks and stop this expensive, unhealthy habit. Find one thing you can remove from your budget, and just do it!
Eat that frog
What is the financial task on your list that you keep relegating to the back burner? Whether you perceive it to be boring, onerous to tackle, or just time-consuming, there is probably a task you have been avoiding. It might be something relatively small like closing unused credit lines, or it might be something bigger like starting a budget. The expression “eat that frog” is sometimes attributed to Mark Twain. The premise is that if you do your most dreaded task (eating a frog) first thing in the morning, the rest of the day will be a breeze.
For many people, that dreaded task might be updating (or drafting if you have none) your estate documents. Your will, living will, and powers of attorney are very important pieces of your financial life. These documents provide guidance about what should happen with your money, your possessions, and your children should you become incapacitated or die. Even if you don’t care what happens to your money and your belongings, if you are parents of minor children, it’s critical to plan for who would take care of them in the event you could not.
Whatever your financial “frog” is for this year, knock it out by the end of January. You will feel empowered to tackle other items on your financial To Do List.
The big one: Vow to track your spending
If there’s one task essential to kickstarting your financial life, it’s tracking your spending. Most people spend money mindlessly. Even if you have plenty of income coming in, for most of us, there’s always room for improvement. Whether you need to cut spending due to reduced income or aim to shift your spending toward specific financial goals, track your spending.
Tracking your spending allows you to be immediately more mindful about the flow of your household’s money. Sometimes tracking for a few months is all it takes for you to gain significant insights into your spending patterns. On the other hand, tracking spending for a year or more provides key financial data for planning your future.
How do you do this tracking? However it works best for you! You can use pencil and paper, a spreadsheet, or a budgeting app. The key is to be consistent and set up a system of tracking that works for you and your family members.
If you have not tracked your spending before, be prepared, because money tracking is magical. Done thoroughly and consistently, you will see your spending habits begin to shift as if by magic. While you can look at your records and make conscious decisions about where to curb some cash outflow, you’ll develop subconscious adjustments to your spending habits once you bring mindfulness into the equation.
Because you’re tracking your spending, you will think about and evaluate each purchase through that lens. If this sounds like a drag and overly restricting, trust me. It might feel limiting at first but if you keep up your tracking, improved spending habits will take over and become second-nature. I have yet to meet a person who spends more frivolously after focusing on tracking their spending.
What do you have on your financial plate to tackle this year? Share yours below! Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your ideas! In fact, we have an accountability group in the community to help us achieve our 2019 financial goals. DON’T MISS IT!!
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