The new year is the perfect time to start looking at your personal finances.
I know…it’s a little scary. Confronting the truth about your budget and making the most of the money you have can feel intimidating.
But it’s easier than you think. All you need are the right tools and tips in place to get you started off on the right foot.
So, stick around. In this guide, we’ll go over some of the smartest money moves you can make to get your 2019 finances in order from the start.
1. Set Goals
Before you can start making money and increasing savings, you need to establish firm goals for yourself. These can be anything from cutting down on expenses to saving a set amount for a vacation over the summer. And those goals can change.
Grab your pen and paper and start thinking about what you want to accomplish in 2019. Do you feel like you spent too much eating out in 2018 and want to cut back? Is there something you’ve been wanting to buy but have put off for the last few years?
Turn these into your goals. As you think of them, write each goal down on the piece of paper.
Remember, your goals don’t have to be big. They just have to matter to you.
Once you have your list, create an action plan of how you’ll reach your goal. Write out the first few steps you’ll take. This will be enough to inspire you to action and gives you a clear guide of how to get started in the first place.
As you progress towards your goals, your action plan might change. That’s fine. The important thing is that you take the steps to achieve what you write down.
2. Create a Budget
One of the best money moves you can make any year is to set a budget. This will make it easier for you to reduce your spending and gives you a clear picture of just how much money you need each month. Here’s how:
Figure Out What You Need
First, take a look at your fixed expenses or the things that you pay every month like clock-work. This includes rent, mortgage payments, insurance, student loans, utilities, groceries, and anything else you need to get through the month.
Once you have the fixed expenses calculated, try to factor in a little extra for those surprise expenses. These include unexpected car repairs, nights out with friends, and the occasional splurge on a new movie or pair of shoes.
Determine Your Income
Then look at how much money you bring in each month. Gather your paystubs and calculate how much you bring in each month.
If you’re salaried, this number shouldn’t change. But if you’re paid hourly, it’s best to err on the side of caution. Use the income you make in your slowest months to determine your budget.
Write It Out
Now that you know how much you’re bringing in and how much you need to get by, write that information down. Use these numbers to determine how much you have left at the end of the month. Anything beyond the things you’ve budgeted for you can put towards achieving your financial goals.
3. Cut What You Can
Trimming expenses are the best way to help you save money each month. But this doesn’t mean you have to sacrifice everything that you enjoy. It just means being mindful of what you’re spending your money on.
Look at ways to reduce your spending. If you buy lunch every day, commit to bringing your lunch at least three days a week. If you buy a cup of coffee on the way to the office, try making it at home instead.
You can still indulge every now and then. But the more you cut back, the more money you’ll have at the end of the month to spend on something you’ve been wanting for a while.
4. Keep Track of Your Spending
After completing your budget, you need to know if you’re sticking to it. The only way to do this is to track your spending.
Start keeping receipts after making your purchases. If you don’t want to hold onto the physical copy, snap a picture of it with your phone. At the end of the week, total those purchases up and see how you’re doing.
If you spent more in one week, promise to do better the next and see where you can cut back further. If you came in under budget, don’t rush out and spend what you saved. Instead, put it towards one of your goals.
You might find it helpful to keep a log of your spending throughout the year. Invest in a bookkeeping journal and write down what you spent. Or if you’re feeling creative, replicate one of these great layouts.
At the end of the year, you can review your spending tracker to see where you can improve, what worked, and what you want to change for 2020.
5. Start Investing
If you’re like most people, investments feel out of reach. After all, if you don’t have a ton of money to invest, you won’t see much return. But this is far from true.
Investing at all, even if it’s just adding a few dollars here and there to a high-yield savings account, makes a huge difference. And everyone, even millionaires, had to start from somewhere.
And if you want a piece of the stock market, but don’t want to commit to a single company, index funds are a great option. Many funds allow you to get started for lower monthly investments and let you grow your portfolio over time.
But do your research. Each fund is different and the more info you can get, the better off you’ll be.
6. Make Use of Employer Benefits
Saving for retirement may not seem like a priority right now. But the earlier you start, the more you’ll have when you retire. But you don’t have to manage this alone.
Look at the types of benefits your employer offers. If they have a 401(k) plan, enroll in it. You don’t have to contribute much-in fact, even $15 a month can make a difference over time.
And if that 401(k) contribution is matched by your employer, then so much the better! Think of employer matching as free money given to you for your retirement. Leaving it on the table is a bad money move, but taking advantage of it is the best thing you can do.
7. Start a Side-Hustle
Extra cash is a great way to help you reach your goals. But you might not always get that raise you to dream of.
So, start a side-hustle. Find something you’re passionate about and see if you can make money doing it!
For example, if you love animals but don’t have room for pets, become a dog-walker on the weekends. If you prefer to make money without creating more work, download a few apps on your phone and make some extra cash doing things you already do.
Then use this money towards your investments or put it in a savings account to create a rainy day fund for unexpected bills.
Remember, a side-hustle doesn’t have to take up a lot of your time. But it can fill in the gaps when your paycheck is smaller than you’d budgeted for.
8. Work with an Accountant
Everyone has to pay taxes each year. But what most people don’t know is that there are dozens of deductions out there to save you money on your tax liability.
Though you won’t qualify for all of them, not looking into little-known deductions is a lot like leaving money on the table. And, let’s face it, the larger your tax refund is, the easier it will be to hit your goals!
One of the best money moves you can make for 2019 is to work with an experienced accountant. They understand tax codes and are familiar with this year’s current deductions.
If you qualify for any of them, they’ll make sure you claim them.
9. Quit Paying for Money-Wasters
New Year’s resolutions are filled with good intentions. But they’re often costly and expensive. Everything from gym memberships to warehouse store memberships takes money away from your savings.
Take a look at the memberships you signed up for.
Do you use them? If you do, keep them. If you don’t, ditch them.
Instead of paying for things that you don’t use, set aside the same amount and put it towards your debts. That extra $50 a month you’ll save on that unused gym membership will make a huge difference in how fast you can pay down your student loans or outstanding credit card balances.
10. Be Prepared to Say “No”
Social pressure is one of the most common reasons people spend money. When others are enjoying an expensive coffee or eating out during the week, it’s tempting to join them. But you need to be prepared to say “no” every once in a while.
If the activity puts too much strain on your budget, don’t do it.
Make These Smart Money Moves
These simple money moves are sure to help you take control of your finances for both 2019 and beyond. Follow them closely, track your progress, and watch your finances improve month to month.
Just remember that progress isn’t always huge. It takes time for money to grow and for new habits to form. Just be patient with yourself and celebrate the victories when they happen!
For more tips to help you keep your finances in line, check out these great posts!