The New Year is almost here, so get ready for a new wave of resolutions, some of which admittedly will fall off our radar around February 1st. However, make sure your financial goals aren’t one of those resolutions that never come to fruition. Keep reading to find how to Have Healthy Finances this new year.
Establishing financial security is well worth the discipline as it can translate to a better overall quality of life, even if you have to make some sacrifices at the front end of things. To help you stick to your financial goals, follow these tips for how to enter the new year, and have healthy finances.
#1 Craft a Realistic Budget
Look, budgeting is never going to work if it’s purely aspirational. Sure, you want to be the person who only spends money on organic vegetables from the farmer’s market and whose idea of “splurging” is buying yoga pants and sensible cardigans, but that’s not you, is it? Because fries are delicious and you’d rather buy shoes. And, hey, who can blame you?
For budgeting that works, follow these two rules-of-thumb:
- 20% of your income should go towards your financial priorities like retirement, your emergency fund, savings, and debt repayment.
- Allocate about 30% of your income to fun spending like happy hours, dining out, going to amusement parks, and shopping.
If you actually set aside money each month for the spending you know you’ll want to do, you’ll not only give yourself a few monthly treats, but you’ll also prevent overspending. Happy shoe shopping (wink, wink).
#2 Include Retirement Planning in Your List of Resolutions
Before you start poking and prodding at your face looking for wrinkles, just listen for a second: planning for retirement should happen early in your life. Start now if you haven’t already. There are plenty of retirement plan solutions that can fit your career, lifestyle, and goals, but these are the main ones to consider:
- A 401k that your employer can match. These plans are ideal for anyone with a traditional career, hoping to contribute as much as possible to retirement.
- If you’re self-employed, look into an IRA or a Roth IRA. These individual retirement accounts are perfect for starting your retirement planning journey, even if you don’t have a classic desk job.
If this all sounds like a bit much, don’t be afraid to loop in a financial expert to help you out. You don’t have to go at it alone!
#3 Familiarize Yourself with Interest Rates
If there’s any number that matters more than your bank account balance, it’s your interest rate. If you want to get your finances in check sooner rather than later, you’ll want to familiarize yourself with the interest rates related to each of your bank accounts, credit cards, and loans:
- For savings accounts, find ones with the best APY possible (while traditional accounts only give out about 0.06%, high-yield ones boast a whopping 1% return).
- When paying off debt, try to tackle the balances with the highest interest rate first, which will save you a lot of money in the long run.
- Consolidate your credit card debt into one account with a more manageable interest rate (and preferably one with 0% APR for the first twelve months).
Change Your Finances, Change Your Life
The new year always beckons a fresh wave of motivation and creativity, so why not capitalize on it for your financial journey?
Instead of looking to Have Healthy Finances in a vacuum, try to pair each new goal with a separate New Year’s Resolution. Want to exercise more? Make that a savings goal by biking to work instead of spending money on gas. Want to spend more time with family? Combine that with your goal to eat healthier by scheduling time every day to cook nutritious meals with your loved ones.
Knock out some bills and strengthen those biceps in one fell swoop! Happy New Year!