As January comes to a close, we know some of you may have already forgotten your new year’s resolutions. Resolving to change your financial habits is one thing—actually doing it takes a lot of dedication and persistence. We put together a list of our 20 favorite tips to encourage you on your path toward your goals. If building your savings is a priority for you this year, check out the included links to learn more about how to put these tips into action in your life.
- Evaluate everything. When is the last time you examined your spending habits? This isn’t about cutting out your daily cup of coffee, but instead about becoming aware of areas where you’re spending more than you intend. Are you living within your means or beyond them?
- Check out the monthly payments you have on autopay. Are you using all the products and services you’re paying for? Do you have opportunities to negotiate lower rates on any expenses, such as insurance or interest?
- Put your goals into writing. It’s one thing to dream about goals over drinks with your spouse. It’s quite another thing to set your goals down on paper and refer to them regularly. Download a free worksheet to help you articulate the dreams, visions, and goals you have for your wealth.
- Put your goals on a schedule. Having a targeted end date allows you to work backward, right down to the daily changes and choices you’ll need to make in order to make those dreams a reality.
- Establish a long-term, strategic plan for saving. Your strategic plan is your roadmap for hitting your goals.
- Set a targeted percentage of your income to save and invest regularly. The invisible rich invest an average of 15% of their monthly income. If that’s not possible for you today, start where you can and work toward that greater goal over time.
- Pay yourself first. Once you set your savings plan, include the amount you decided on in your budget and move the money into savings as soon as you receive it. Some banks allow you to automate your savings, so you won’t even see that money hit your checking account. If you’re saving for retirement, take advantage of automated deductions from your paycheck and adjust the amount you’re saving out of your monthly budget. Building your savings without having to make a financial decision every month is key!
- Put cash windfalls into your savings. If you receive bonuses at work, these can be an ideal opportunity to sock away significant cash if you can use your salary to cover your living expenses. Successful saving is all about discipline and deferred gratification.
- Make saving for retirement a top priority. While most things in life have financing options available, retirement does not. Build your retirement savings as early as you can.
- If your employer offers a matching program for retirement savings, take full advantage. This is one of the best ways to build your retirement savings because it’s free money! Failing to take the full employer match is one of the biggest mistakes we see people make early in their careers, when time (and therefore compounding interest) is on their side.
- Regularly evaluate your retirement plans. If, like most people, you’re counting on income from a mix of sources, ensure that your assumptions about those sources continue to be valid over time.
- Stay on top of changes to retirement rules and regulations. The SECURE Act brought significant changes for a wide swath of people starting in 2020, and it’s important to know how you may be affected.
- If you haven’t tried it before, dive into the world of investing. One of the best ways to get comfortable with investing and learn about the stock market is by setting up a hypothetical portfolio and watching its performance over time. Get the whole family involved!
- In fact, get your kids or grandkids involved in conversations about saving and investing from an early age. Doing so will help them make better financial decisions when they become adults. Allowance is a powerful tool for teaching money management to even very young children.
- Keep emotion out of stock purchases. Dollar-cost averaging is a strategy many beginning investors use to help apply discipline to their investing decisions. It involves investing a set dollar amount each month, regardless of market fluctuations.
- Start saving early for college. This is really the best way to avoid student debt without a major shock to your budget. The earlier you start, the more time a small contribution has to grow in a tax-advantaged plan.
- If you have a student getting ready to head off to college, explore all your options before taking out any student loans. By planning ahead, your student can graduate financially sound.
- Check your tax withholdings to ensure they’re accurate. The IRS Paycheck Checkup Calculator may help you better understand your overall tax picture. If you’re used to receiving a significant tax refund, consider how those funds could serve you better through investments during the year rather than giving the IRS an interest-free loan.
- If you’re close to itemizing your tax deductions, take advantage of bunching. With a little year-end tax planning, you can determine whether it makes sense to pay real estate taxes or make a significant charitable contribution a little early in order to push you over the limit of the standard deduction.
- Ask for help! Budgeting, saving, investing, estate planning, and other big financial decisions can be overwhelming if you don’t have a background in these topics. We strongly encourage you to seek professional advice before making any big decisions. We serve as a trusted, strategic advisor on matters related to retirement planning, estate planning, tax, saving for college, and more. Contact us today to schedule a consultation.