A common new year’s resolution is practicing financial discipline. This resolution, like many others, starts strong, but as the year goes on and expenses add start stacking up, many begin to feel “resolution fatigue.” Resolution fatigue is a term that refers to feeling worn out from trying to maintain a goal. The data shows that most people give up on their new year’s resolution by Jan. 19, which is known as “Quitters Day.” To help keep/get you on track, here are financial tips to finish out 2021.
- Create/Update your budget. Having a functioning budget is key to having financial success. A budget is an opportunity to properly assess your income, assets, and lifestyle to prepare for the future. For those who did create a budget at the top of the year, your situation may have changed between New Year and now. Looking back at your budget will allow you to adjust, if need be, to your current lifestyle. If you have not created a budget, there is no better time to do so. Budgeting requires discipline, but if properly managed, you can spare funds for entertainment.
- Schedule Automatic Payments. Automatic payments ensure that your expenses are paid on time each month. This helps avoid late fees. You can keep your payment dates marked on your calendar. The only issue with automatic payments is potential overdraft fees if you do not have the money available. Some programs offer a discount for setting up automatic payments.
- Tally your total assets. Calculate how much money you have access to and where it is. Consider closing unused bank and credit card accounts.
- Try a saving spree. A savings spree is a savings method where you put back the dollar amount equal to the day of the month. On day one, you would put back a $1. On day 30, you would put back $30. This is an interesting method of saving that can yield tremendous results in a short time.
- Try a save/spend method. For a predetermined length of time, for every dollar that you spend, put that amount in savings, what you spend. This method may lead you to restrict your spending to the necessities while also putting money into your savings.
- Start/Increase your retirement contribution. Any additional money you can put towards a retirement account will pay off in the future. Retirement account contributions can be used as a tax write-off. Start saving as soon as possible.
- Invest. Investments offer a return on your money that you can have on hand. Investing can be risky, but the risk can very well outweigh the reward. Nowadays, investing is easier than ever. There are apps like Robinhood and Webull that allow for instant investing. Money transfer apps like CashApp are allowing users to invest in various businesses as well as Bitcoin.
- Utilize credit cards. Credit cards are a great way to build credit. Different credit cards offer different perks. Some cards like OpenSky will not check your credit, but you will have to put a down payment because it is a secured card. Debit cards do not help you build credit.
- Consider your living arrangement costs. Buying and renting a home are both expensive endeavors that last nearly a lifetime. If you are renting, consider finding a cheaper apartment. If you are paying a mortgage, consider downsizing your home.
- Weigh the costs of ownership vs. convenience. Owning a home or car is a very common goal, but ownership comes with its own set of costs and benefits. For instance, if you are a single individual who is unsure where they will be settling long-term, immediately purchasing a home may not be in your best interest. Many additional expenses come with owning a home, which one needs to be sure they are prepared for. Owning a car can be similar. If you live in an area where public transit is a viable option, maybe reconsider purchasing that new car until needed. The expenses associated with ownership are often overlooked and can lead people down the wrong financial path.
- Pay with cash. Responsibly, taking out a loan or credit card to handle major expenses is fine. But, if you can pay for something outright, do so. Paying for a product or service with cash eliminates interest fees and monthly payments.
- Find a side hustle. If you evaluate your budget and find that you are coming up short, it may be time to consider finding a part-time job or a side hustle. Contrary to popular belief, many individuals must supplement their income with another job. Whether picking up part-time at a nearby store, cutting hair, or doing make-up, a side hustle is a great way to achieve your financial goals.
The year is flying by swiftly. In the blink of an eye, the holiday season will be upon us, which we all know can be a financial nightmare. Soon after that, it will be time to set new resolutions and goals for a fresh, new year. Before that happens, step back and make sure you are on track today with your mid-year financial goals.