As this year winds down many people are reflecting on how things went. Maybe 2015 was a huge year for you and you’re looking forward to this next one.
Maybe you’ve had some setbacks, but you’re ready to change the tide.
Either way I have some tips to help you jump-start and improve your finances for next year and beyond.
Empower Your Finances, Empower Your Life
How we spend our money is a reflection to some degree of what we value.
Get Rid of Debt
Paying off your debt is a wonderful milestone. Once you get rid of it you’ll have extra cash in your budget to put towards building your wealth.
Two popular and effective methods of paying off debt is the debt snowball and debt avalanche method. The snowball focuses on knocking them down by balance while the avalanche looks at interest rate.
Choose the method that fits your personality. It’s more important that you follow through on your goal than just picking the one that on paper might get you there faster.
Build Up a Stash of Savings
If you don’t have one already, creating an emergency fund can be a smart move.
Don’t have an idea of how much to shoot for?
Start off with one month’s worth of expenses. Should something happen with your car or with work, you at least have a buffer for a few weeks.
Trimming back on expenses is key, so tactics like negotiating a better deal on your cell phone or cable bill can give you some ‘extra’ money to build your savings.
Automating transfers into savings will also keep you on track.
Contribute More to Retirement
It can be difficult to imagine what your life will be like in a few decades, but preparing for retirement now can make a huge difference later and possibly at tax-time.
Even if you can’t contribute much, try to take advantage of your biggest asset – time.
Go ahead and see if you can contribute enough to your company’s 401(k) to meet the match.
Open up an IRA and start making deposits on it. As your income increases, nudge up your transfers.
Contributions to your IRA may also be tax deductible and make you eligible for the Saver’s Credit.
How to Boost Your Chance of Achieving Your Goal
Once you’ve picked out your goals, it’s time to take things to the next level.
There is nothing wrong with shooting for any these goals we’ve mentioned, but there are two huge components that can help you increase your chances of success – defining your WHY and making a deadline.
Why are you paying off debt or saving up? Do you want to have some buffer in your budget so you can make a career change? Do you want to get your finances ready so one of you can stay home with the kids?
Having your why defined makes it easier for you to stick to your plan.
Deadlines are also powerful because you can work backwards from the date and break things down into manageable pieces.
Want to save $2,000 this year? That means you need to save around $167/month or $38/week.
You can then make it a game – finding a way to trim your bills by that much.
Thoughts on Reaching Financial Goals
I’d love to hear what financial and personal goals you’re going to tackle. Don’t forget to include why you want to accomplish your goals and when you want to reach them.