5 Steps to take now for a fresh start in 2018
The New Year brings us a fresh start and a chance to become the best versions of ourselves. With holiday spending over, we have an opportunity to review and get a better handle on our finances. In theory, spending less and saving more sounds like a breeze, but we understand it can be difficult to put it into action and to choose a starting point. However, with these five tips, you can be well on your way to financial success in 2018.
Get out of debt.
Whether it’s credit card debt, student loan debt, or mortgage debt, all debt is bad debt. It can cause worry, stress, and mental strain. While debt may have come from investing in something great, such as an education, wedding, or home, it tends to drag on and on after a while and can take a toll on your finances. When you get out of debt, you will have more control over your income and more spending power, which itself is an incredible feeling. The quickest way to get out of debt is to stop using your credit cards and focus on paying off as much as you can each month. Prioritizing is huge in this step, as you will want to focus on tackling the debts with the highest interest rates first to avoid those pesky interest charges each month. It also comes down to what you’re willing to sacrifice. Whether it’s cutting your expenses elsewhere or taking on more hours at work, each payment can help reduce your debt substantially.
Add money to your savings account each month.
Most Americans have less than $1,000 in their bank accounts. What would happen if there were an emergency? This leaves us vulnerable and is an excuse to acquire more and more debt. While it may not be feasible for some to just put $1,000 into a savings account all at once, it still can be done pretty easily. Let’s check out some math. Putting a small $20 each week into your savings equals more than $1,000 in a year. That is two uber rides, takeout meals, or Starbucks coffees that could be cut out each week. When you cut back on the unnecessary splurges like eating out or going out for drinks, you could find that saving money can be attainable!
Contribute enough to your 401K to get full employer match.
The closest we get to “free” money is by a 401K employer match. At this point, we all know how smart it is to invest in our 401K and our future, but do we really know how much is the right amount to put in? Start off by doing at least your employer match and then research to determine what would be best for your specific circumstances. Financial planner Richard Reyes breaks down the 401K finances. “Let’s say your employer matches 100% of your contributions up to 3% of your salary, which—for the sake of simplicity—is $50,000 a year for your entire career (from ages 22 to 65). If you contribute 2%, you could have $386,000 after 43 years, assuming a 6% average rate of return. But notch up your contributions by just 1%, and you could have $578,000—or nearly $200,000 more over your career.” When you put it in those terms and can visualize an outcome, a 401K sounds like a plan worth investing in!
Find ways to make more money.
Whether you’re a CEO or in an entry level position, nothing is certain and job stability may change any day. Having another income stream may be a great way to plan for the future as well as to have a little extra money now. Another income source acts as job insurance, but it also may contribute to early retirement, paying off debt, or it just may be the extra cash you need to get that new car you’ve had your eye on. Being dependent on a single income source can have its repercussions, so it’s paramount to think of other possible revenue streams. Even walking your neighbor’s dog for an extra $20 is a great start to becoming less reliant on only one source.
Try to put an end to addictions.
Way easier said than done, this tip is huge for saving money in the new year. For most of us, we have that one thing we indulge ourselves in and splurge on. From fast food, to monthly subscriptions, to cigarettes, we become too focused on treating ourselves to things we don’t need. We’re going to dive into more math to give you a better overview of what spending looks like. The average American spends $1,200 on fast food each year. Cigarettes on the other hand, costing on average $6.16 per pack, can eat up $2,200 each year if you’re smoking one pack a day. If you have both of these habits, cutting back or quitting could really make a difference. When we put our addictions and our splurges into a yearly spending visual, it can be much easier to kick the habits and turn that money towards savings or paying debts.
Financial planning is not the easiest or the most fun task, but by tackling even one of these tips, you can find yourself with less debt, less stress, and more financial freedom in 2018! For more tips and advice for financial health, check out more blogs from Benovate below.
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