2016 is just days away, and that means it’s time to get your finances in order. Many people find it easy to begin the journey during the first week of January, but by March, bad habits begin to resurface. Here are 16 tips that can take your finances to the next level—and help you stay financially strong throughout the entire year.
Take a snapshot.
Having an idea of what you want to do is great, but putting your plan on paper is the key to success. Pull out a pen and calendar and write down your life ambitions, upcoming events and realistic financial goals. This will give you a snapshot of the reasons for tightening your financial belt and will serve as a useful reminder when times get tough.
Did your children receive tons of clothes from your family for Christmas? Before you pop tags, evaluate how many shirts and pants they truly need—then pack up the remaining items and head to the store. Ask if you can exchange the clothing for larger sizes and get the same pieces in sizes your child would wear a year from now. You will save money in the long run without upsetting well-intentioned gift givers.
Use the fireplace.
Energy bills creep up on you during the winter months. The fireplace is the perfect way to offset costs. If you are lucky enough to have a fireplace, put it to good use during the colder months. Come up with creative ways to feel the heat, like having a family game night in the living room by the fireplace.
Lead by example.
Don’t wait until they’re heading off to college—teach your children to be financially savvy at an early age. When they receive cash gifts or an allowance, show them what it’s like to be in the real world by making them save a percentage of their money or “taxing” their money. You can secretly put some in an interest-bearing account and, each year, show them how their money is growing. By the time your kids are ready to leave the nest, they’ll thank you for helping them to create a healthy nest-egg.
Sleep on it.
You’ve heard this piece of advice before, and it’s still relevant: Don’t make impulse purchases during your journey toward financial freedom. This doesn’t mean you shouldn’t buy anything, but you should definitely give yourself time to think about why you are making the purchase and whether it aligns with your financial plan (see Tip #1). Shop around, do your research and revisit your plan to ensure you are making the right decisions.
Do the 52-Week Money Challenge…in reverse.
If you’ve never heard of the 52-Week Money Challenge, you’re missing out. This is a fun, year-long savings plan that will leave you with $1,378 at the end of the year. The plan originally calls for a person to start by saving $1 the first week, $2 the second week and so on—each week, the number continues to increase. But instead, try the challenge in reverse, saving $52 the first week, $51 the second week and so on. You will stay motivated by seeing immediate results—and as the weekly amounts decrease, it becomes easier to continue the challenge.
Start a side business.
Are people always asking you to sing? Earn money singing at weddings. Do you bake the best cookies on the block? Ask friends about catering their next event. Everyone is good at something, and using your talents to make a little extra cash on the side will definitely help you to reach your 2015 financial goals.
Take note of your triple payday.
Most employees have 26 pay periods within a year. This means that two times out of the year, you’ll receive three paychecks in one month instead of just two. Take advantage of these times to attack those nagging bills you could pay off in one payment. Consider your insurance premium—you could pay your entire premium for six months, which would free up more monthly cash during that six-month period. Do it all over again when your extra pay period comes around and you’ll always feel ahead of the financial “game”.
Go for the big freeze.
After you’ve paid your insurance premium, you may have money left over—but don’t spend it on the wrong things. Wholesale warehouse clubs like Costco and BJ’s have more than just 80-count rolls of toilet paper. Take advantage of their bulk-buying deals and put your deep freezer to good use. You can purchase non-perishable items and “freezable” food like meats, frozen vegetables and pasta, split the items into smaller dinner portions and throw them in the deep freezer for future use. Unthaw food as you need it—and save a pretty penny while you’re at it.
Start saving now for next Christmas.
Many banks have savings accounts that automatically deduct a certain amount of money every time you swipe your debit card. The amount is usually up to your discretion—most people opt for $1 deduction for every transaction. Use this fund as a Christmas savings account and decide that whatever amount accumulates by December is the amount you will spend on purchasing Christmas gifts next year.
Review, review, review.
Did you get a new appliance or gadget for Christmas? Did you talk to your agent about your purchase? If your answer is no, you’re making the same mistake many other people make every year. When you purchase big-ticket items and make upgrades to your home, it is very important to speak with your insurance agent regarding changes you may need to make to your insurance policy.
Give your money away.
You can garner major tax deductions if you donate money to 501(c)(3) nonprofit organizations. Do your research to make sure an organization meets this classification—you can donate money, clothes, cars and anything else you have. The tax deduction is good, but giving to those in need is even better.
Review employer benefits.
Whether you’ve been with the company for less than a year or more than two decades, it’s important to regularly review your employee benefits package. As your life changes, you may find certain programs beneficial to your lifestyle. Even if you opt out of your company’s benefits, it’s always important to ask questions. Your company saves money when you opt out of some benefit programs and as an incentive, some companies will offer cash if you choose to forgo their benefits package. Schedule some time to speak to your human resources manager and dust off that employee handbook.
Take advantage of online sales.
Many of us do not use up to 40% of the clothing and appliances we have in our homes. Use your closet and cupboards as a gateway to the world of e-commerce. Selling your personal belongings is never easy, but focus on the financial benefits and how great it will be to de-clutter your home. Use notable platforms like eBay and make transactions through a secure merchant like PayPal. Beware of scams and fraud and remember: If an offer seems too good to be true it probably is.
Live a little.
Working hard to reach financial goals is definitely worthwhile. But it’s important to enjoy the fruits of your labor as well. You can have fun while still achieving your financial goals as long as you plan effectively and efficiently. Allot a certain amount of “splurge money” each month or each quarter and enjoy what you spend. This will keep you motivated and remind you of why it is so freeing to be financially sound.
Use Davis Dyer Max as a resource for reaching your financial goals. May your 2016 be a year of happiness and prosperity!