We know it’s not always easy to get in the personal finance mode.
But picking just one or two of the these things to do (and seeing them through) can make a big difference in your financial stability.
Here are 15 ways to help you ring in a new financial you, full of possibilities, and reach your goals of making this year the best one yet.
1. Be Prepared for the Unexpected
Stuff happens. Your car breaks down, your refrigerator stops working, or you wake up one day and decide your current profession is no longer a fit. An emergency fund that covers 3 to 6 months’ worth of living expenses can help you be financially prepared for whatever life throws your way.
See our Savings By Age Guide to see if you’re on the right track.
If you don’t have an emergency fund, make creating one a priority this year. Start saving small (even $100 a month adds up), see if you can identify a second source of income, or go through your spending and try to identify expenses you cut.
Your emergency savings should be kept separate from your other savings, so consider stashing it in its own high-yield savings account, like the Ally Bank Online Savings Account, where it can earn a competitive interest rate and you won’t be penalized if you need to dip into it and make a withdrawal.
If you already have one, make sure it’s up to date and can cover any increases in housing costs or medical expenses you may have experienced during the past year, as well as any recent additions to the family.
2. Know Your Score
If you plan to buy a car or home, or apply for a new credit card this year, your credit report will play a key role in making those dreams possible. That’s why it pays to know your credit score. Many credit card companies include your credit score in your monthly statement. You can also request a free copy annually of your report from TransUnion, Equifax and Experian by going to AnnualCreditReport.com.
3. Automate Your Bill Payments
Have you ever missed a monthly bill? Hey, life happens. But when it comes to paying your mortgage, cable or electric bill, why not consider letting technology do the work for you and automate your payments? That way, the money will be automatically withdrawn from your bank account or the expense will be charged to your credit card, and you’ll never have to worry about paying a late fee again. Contact your bank or account service provider to learn the easiest way to set up automated payments.
While automation makes paying bills easier, we don’t recommend full blown “set it and forget” mode. Make sure to review your month statements and keep an eye on recurring bill payments and charges on your monthly statements.
4. Review Your Subscription Services
While setting up autopay, go through your monthly statements and see what other recurring charges you already have. Ask yourself: Are you still getting value out of your Netflix/Hulu/Spotify/etc. subscription? If not, consider cancelling and saving around $10 per month per subscription — or $120 this year.
5. Reward Yourself
Contrary to popular belief, credit cards can be beneficial to your bottom line. In fact, they can be rewarding. For example, some credit card offers include a percent cash back on daily essentials like gas and groceries.
Depending on your lifestyle (foodie, world traveler, etc.), other rewards credit cards might offer higher rewards that better fit your spending habits. But no matter which card you choose, be sure to pay your bill off monthly to avoid any interest charges.
6. Become Your Own Auditor
No, this isn’t the most exciting of our proposed financial resolutions. But with nearly 80 percent of consumers preferring to pay via credit or debit cards, it can sometimes be difficult to remember where your money goes. Get in the habit of going over your statements each month or regularly check your transactions online via your bank’s website or mobile app. Not only will it help you understand what you’re spending your money on, but also help you catch any random charges or overcharges.
For less effort, sign up with your bank or credit card to receive alerts about abnormal transactions, withdrawals and/or charges. Ally Bank automatically offers alerts to help you stay on top of your account activity, and you can create custom alerts to stay on top of balances, deposits, transactions, and more.
7. Expand Your Portfolio
Hopefully you’re able to take part in some form of an employer-sponsored retirement savings fund, whether it’s a 401(k) or a 403(b). If you’re fortunate enough to max out contributions to that fund — or you’re interested in diversifying your retirement savings — consider opening an IRA. Ally Bank offers IRA accounts, which are FDIC-insured up to the maximum allowed by law.
And many brokerages, including Ally Invest, offer self-trading and more managed investing options, depending on your needs and financial goals. It’s important to remember that investing involves risk, including the loss of your principal.
8. Reassess Your Investing Mix
Saving for retirement is important regardless of age, but how and where you invest your money depends on where you are in life. Big events, such as a birthday or the beginning of a new year, tend to make some people step back and wonder if they’re doing the right things to take care of themselves and their loved ones now and in the future.
If you’re a self-directed trader, now’s a good time to assess your current portfolio and make any needed adjustments. Or, if you utilize a more automated approach, like Ally Invest® Managed Portfolios, make sure your financial goal, time horizon, and risk tolerance are all up to date so that the investment approach remains aligned with your evolving goals.
9. Plan for the Year Ahead
What do you want to do this year? Take the kids to Disney World? Renovate your kitchen and bathrooms? Attend several concerts and have floor seats?
Whatever big, fun (and likely expensive) trip or adventure you want to experience this year, start saving for it now. If you can, socking away a couple hundred bucks per month in a high-interest savings account now will lessen the financial burden down the road and allow you to enjoy it guilt-free.
Keep in mind, the amounts above are based on averages, meaning the actual amount you will need depends on your individual circumstances. For example, the cost for a two week vacation in Hawaii will be drastically different than a weekend getaway to your local State Park.
10. Automate Your Savings
How do you typically set aside money for those big-picture expenses, like your retirement savings or children’s college fund? If you have your paycheck directly deposited into your checking account, contact your bank to automatically have a portion of it transferred to a savings account. This will help ease your burden of not spending that cash and ensure that you’re consistently putting money away.
11. Reduce Your Debt
The average American carried $38,000 in debt in 2018. That amount doesn’t include mortgage debt, so it’s mostly in the form of auto, high-interest credit card and other debt.
If the amount of your debt feels overwhelming, look for ways to repay it faster, like making an extra payment or getting a side hustle.
12. Take Steps to Become a Homeowner
Homeownership is one of the pillars of the American Dream. If you don’t yet own a home — and doing so fits into your dream this year, next year or in the not-so-distant future — begin taking the steps to get there.
Make sure your credit is in order. Start saving for a downpayment. If you’ve already checked off those boxes, arm yourself with all the data you need to start shopping smart. The Ally Home Team® can help you understand how much house you can afford and set an affordable budget by pre-qualifying you for a mortgage.
13. Consider Refinancing
If you already own a home, chances are your mortgage takes up a significant piece of your monthly budget. If you’re looking to reduce your monthly payment, consider refinancing. It might not make sense for everyone, but it could pay off now and in the long run.
If you’re on the fence about refinancing, here are four reasons you might want to consider it.
14. Downsize or Upgrade Your Home
Is your two-bedroom house not enough home for your growing family? Or are you an empty nester with grown kids who have completed college and are doing well on their own? Either way, it might be time to look into buying a home more in line with your current needs.
15. Expand Your Financial Education
Learning is a lifelong process. That goes for life experience and career growth, but how about your financial know-how? Consider subscribing or bookmarking periodicals such as AARP or Money and blogs (like this one!), or follow personal-finance thought leaders on social media.
Whichever your preferred method of consuming the news, do your best to make sure that you’re up to date on the latest happenings and making the best financial decisions for you and your family.
Maybe you’re already implementing one or two of these resolutions into your financial lifestyle. Or perhaps you have a couple of them ID’ed as focus areas you should work on. Regardless, we hope these suggestions have given you several ideas on how you can easily improve your financial well-being this year.
- Which of these financial resolutions are you most likely to implement this year?
- What was the best financial decision you made last year?
- What is your biggest piece of advice for those just starting to create an emergency fund?