The start of a new year always brings with it new personal goals – lose a few pounds, go on regular date nights with your significant other, get rid of a bad habit or create more good habits. Of course, many of our goals revolve around finances.
In fact, 37 percent of U.S. adults said their New Year’s Resolution was to save money or save more money in 2018, according to YouGov. One of the few ways to keep that promise to yourself is to pre-plan. Losing weight? Invest in that gym membership. More dates? Buy a gift certificate to your favorite restaurant. But how do you plan to save more this year?
A financial goal also has some solid, easily implemented supports to help you meet your goals.
Put it On Paper
There’s ample evidence that a written goal is much closer to an achieved goal. After picturing the goal in your mind, you have to reprocess it to put it on paper, thus creating a neurological double-bond.
You should also set positive rather than negative goals for saving money in 2019. Negative goals are emotionally unattractive and therefore difficult to focus on. If your goal is “get rid of student loans,” you’ve attached a negative emotion to an already difficult goal. Reframing this initiative as “start a college fund for kids” because you know you’ll have to pay off the debt to achieve that, this becomes a positive perspective and makes it easier to focus on.
Writing out your spending plan is another easy way to focus on changing finance habits to save money in 2019. One practical option is the 50/30/20 rule. You start with 50 percent of your income going to “needs” – mortgage, car payment, health care and other necessities. Then 30 percent is put toward “wants” – nonessential items that make life worth the trip: vacations, steak dinners, Netflix, new stylish shoes. Finally, 20 percent is left for savings and investments – from your emergency fund to your 401(k) contributions, even paying extra on your student loan.
Simple rules like this, along with helpful calculators available many places online, can get you started on budget brainstorming.
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Put Tech to Work for You
More of our world is automated every day. You can put this technology to work for you as you seek a financially strong 2019.
Automatic Contributions: You can make automatic contributions from your paycheck to your 401(k) or another savings vehicle, like an HSA or a savings account. The automation of the process helps you deposit that money effortlessly. If you received a raise for the year, set part of it aside right away through automation. You’ll still see the effects of a raise and increase your savings without knowing that the money is gone.
Budgeting Apps: New budgeting apps come out regularly. These programs help you to organize your finances and often give tips on how to save in the future as needed.
Mint.com automatically updates and categorizes transactions, which gives you a real-time picture of your spending. Pocket Guard gives you a quick snapshot of how much money you have in each category of spending – bills, food, savings contributions, etc. Albert is one that makes easy-to-understand suggestions for improving your financial life as you budget. There are several options out there, and most of them have at least basic user memberships for free.
Free Credit Checks: Checking your credit is vital to financial health, and can easily be done online. An annual free credit check is available from each of the three major credit bureaus: Equifax, TransUnion and Experian. This means you can get three per year, so you could space these out into one in January, one in May and then October. This gives you a “dipstick test” of where your credit is throughout the year, and a goal to shoot for the next time you check your report.
Tax Time Cometh
The landscape shifted with the new tax law in 2017. Most of the country has been affected, and most people will no longer itemize their taxes because of the rise in standard deductions. This means changes in charitable giving, investing and medical expenses. If you’re accustomed to a tax return of a certain size when budgeting for the year, that may have changed. Watch the process closely, and use a tax return calculator to estimate the general size of your return this year.
If you receive more of a tax return than expected, you can commit now to putting it toward your savings goals. If your tax return is less than you’d like or you’re paying more taxes than expected, you can adjust your spending plan accordingly for next year.
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Keep that Promise to Yourself
Saving more and spending less are worthy goals, and putting supports in place ahead of time will help you do so.
Finally, make an appointment with your advisor to help you look over your portfolio and plan for the best year ahead. A listening ear and an extra set of eyes can help you see where things need to change for an optimal 2019.
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