Can you say, new year, new me?
It’s no joke that money health is part of your overall wellness. It affects your mind, body, and emotional health.
To get the ball rolling, you can start by saving more money this year. As far as New Year’s resolutions goals go, this one tops the cake. When you have more money squirreled away in your savings, you have more options, and in turn greater freedom. What’s more, you won’t stress out when you’re dinged with the unexpected expense, like a large medical bill, urgent dental work, or shortfall in income in a given month.
Along with general savings goals, here are the best New Year’s financial resolutions to help you move into 2020:
1. Build up your emergency fund
Saving for the all-important e-fund is key. Yet, your head might be swirling when it comes to how to save three to six months of living expenses.
Just like climbing Mount Everest, doing a set of 100 push-ups, and every other amazing feat, start small. Then work your way up. For every milestone you hit—say, for every $500 or every month of living expenses saved—treat yourself to something small.
2. Open a high-yield savings account
High-yield savings accounts are like the sweet meat of savings. Instead of getting a measly 0.09% interest on your savings account, which, according to the FDIC, is the current average, a high-yield savings account generally offers a 2.0% interest rate – or more.
One of the best parts of a high-yield savings account is that unlike, say, a certificate of deposit (aka CD), your money won’t be locked in for an agreed-upon amount of time. For instance, six months, a year, 18 months, and so forth. So, for all of these reasons, consider a high-yield savings account.
3. Save more for retirement
Sure, retirement years might not be for another oh, thirty or forty years away. That being said, while you can borrow for everything else — a college education, buying a house, a set of wheels, a wedding, that Star Wars-themed blowout for your milestone birthday — you cannot take out a loan for your golden years.
So, you’ll want to save as much as you can for retirement now.
Start by looking into your employer’s 401(k) plan. Do they offer matching contributions? If so, aim to save up to the matching amount. Otherwise, that’s money you’re missing out on.
If your employer doesn’t offer a retirement plan, you can save your beans into an IRA. The contribution limits for 2020 are $6,000. Remember: for IRAs, you have until April 15, 2020 to make contributions for 2019. The earlier you start, the longer you have for that money to grow. After a few months, if you can swing it, bump up your contribution by a percent or two. Chances are you won’t miss that moola leaving your paycheck. And if you do, you can also bump it down.
4. Don’t forget to save up for something fun
While saving is an investment toward the future you, it’s not always the most fun thing to do. You worked hard for that money, and you want to enjoy some of it.
There’s absolutely nothing wrong with spending it on something fun and frivolous, as long as your other goals are being met.
Saving for something that’s 100% fun will prevent you from feeling deprived, or getting a case of debt fatigue. So, choose a fun savings goal, such as a weekend getaway, a designer pair of kicks, or a gadget. To help you stick with it, automatically save part of your paycheck until your goal is fully funded.
5. Pay down your debt
If you carry debt, paying it down is a “must do” when it comes to your new year goal setting. When you pay off debt, particularly “bad debt,” such as high-interest credit cards, you’ll have more money freed up to put toward your other goals. For instance, you can save more in your emergency fund, or toward a fun purchase. While you don’t exactly have to fast-track your debt payoff, it’s important to have a plan and stick to it.
6. Commit to paying off your smallest bill this year
Overwhelmed by the idea of paying off that looming debt? Don’t be. Consider the snowball debt repayment method. This is when you tally up all your debt in order of smallest to largest amount.
Once you pay off the smallest debt, you focus on the debt with the next-highest balance. Commit to paying off your smallest debt by the end of 2020. Hitting that first goal will have you pumped and ready to crush the next balance.
7. Set your bills to autopay
There’s nothing worse than stressing about your bills. When you set your bills on autopay, it guarantees your bills will be paid on time. In turn, it can alleviate anxiety and uncertainty about due dates and payments. To make sure you have enough money in the bank when the payment dates hit, try to align your due dates for when you’ll have cash available to pay the bills. And divvy up each paycheck so you can cover those bills.
8. Improve your credit score by lowering your balances
Did you know you can bump up your credit score by lowering your overall debt balance? This is what’s known as your credit utilization ratio. It’s expressed as a percentage, and it’s your balance on all your credit cards against your total limit.
For instance, if you have $3,000 of credit card debt, and the total cap on your credit limit is $30,000 on all your cards, your credit utilization ratio is 10%. The general rule of thumb is to keep this to 30% or under. Of course, the lower the percentage, the better.
You’ll also want to get into the habit of monitoring your credit score so you can see how your score can be improved.
There are a handful of free credit monitoring services. Plus, a few credit card companies and money management apps offer a free credit score check. You can also order a free credit report at AnnualCreditReport.com. You’re entitled to a free report every 12 months from each of the three major credit reporting bureaus.
9. Refinancing your credit card(s) for a lower interest rate
In a nutshell, refinancing is when you swap out an existing loan for one with better rates or terms. For instance, you can refinance credit cards by consolidating with a personal loan.
Another way you can refinance your credit cards for a lower interest rate is by transferring it to a balance transfer card with a lower interest rate than your current one. Or, you could take advantage of the zero percent introductory rate. Just be sure to do your homework before applying. If you’re considering transferring your balance to one with a zero percent introductory rate, mull over whether you can realistically pay off your balance before the standard rate kicks in.
Also, when you get pre-approved for a card credit, the issuer will do a soft pull, which doesn’t ding your credit. Yet, when you actually apply for a credit card, that’s a hard pull, which will affect your credit.
10. Clean up those spending habits
There’s talking the talk. Then there’s walking the walk. Intentions are fine and good, but habits are everything. Without having good saving and spending habits, your intentions are merely lofty wishes. By forming solid saving habits, you can meet your savings and debt payoff goals.
Those feelings of euphoria and excitement that can come with impulse spending are fleeting. In turn, you might feel resentment and emptiness. It doesn’t stack up against that true feeling of accomplishment that comes with reaching your money goals. Here are some ways to clean up your spending habits, and create new, positive ones.
- Make a budget
Budget can be an ugly word. It can trudge up feelings of deprivation, scarcity, and not having enough. But think of it as a spending plan. Without a plan, you run into the danger of not being able to meet your financial goals.
Start by listing all your basic living expenses — rent, groceries, insurance, student debt payments. Then, figure out what your take-home pay is from your day job and side hustles. Creating a budget is a simple way to level up your financial wellness.
- Track your spending
Seeing exactly where your money is being spent goes hand-in-hand with creating a spending plan. When you track your spending, you can pinpoint areas where you’re spending more than you thought. In turn, you can make adjustments so they’re in greater alignment with your budget and your goals.
Start with tracking your spending for 30 days. This way you can get a more complete picture in a doable time frame. You can also use a money management app to keep things simple.
- Find an extra $100
Once you’ve begun tracking your spending, challenge yourself to scrounge up $100. You’ll most likely discover an area where you’re spending needlessly. Perhaps you’ve been eating out too much, or you’re prone to impulse shopping on the Internet.
For instance, maybe window shopping at your favorite boutique clothing store a few times a month adds up to $100. Or, eating on the run, which is $10 per meal, adds up to $100 over a 30-day span. Whatever the case, curb your spending in that one area to free up a hundred buckaroos. Consider putting that money toward your savings or a debt payoff goal.
- Work a no-spend day into your weekly schedule
Pick a day of the way where you don’t spend any money whatsoever. No quick stops at the drive-thru, or a run to the coffee shop during your afternoon break. Designating a no-spend day not only helps you save a few beans, but it also helps you pinpoint times during the day when you feel an impulse buy coming on. Instead of caving in, work through them.
If you’re trying out a no-spend day for the first time, you might want to try it on a Sunday. As you’re most likely mired in a routine, you can plan ahead. In turn, there’s less room for temptation.
Switch to a bank account that will help you reach your financial goals
When it comes to your New Year’s resolutions, it’s important not to dismiss your money goals.
The best resolutions involve your bank account and budget. In turn, you’ll soon be making serious headway toward improving your finances.
Here’s a final pro tip as you start the new year: Switch to a bank account with no fees. Banks with fees — think monthly maintenance fees, overdraft and non-sufficient funds fees — are like having a bathtub with a leak at the bottom. How can you expect to save when money is pouring out?
So, consider making a wise money move by switching to Chime. We’re a no-fee bank account that offers cool features such as automatic savings, getting paid up to two days early, and SpotMe, which offers up to $100 in fee-free overdraft for eligible members.
Here’s to a new year and new financial goals!
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.