January is financial wellness month – a refreshing theme after a busy (and expensive) holiday season. It’s also a great time to take a second look at your financial goals or set some if you haven’t already.
Financial wellness month presents a great opportunity to start the new year off on the right financial foot, and we have some recommendations for how you can do just that.
Write Down Financial SMART Goals
What are SMART goals? Smart goals are goals that are specific, measurable, actionable, realistic, and time bound.
Specific: Be specific with your goals. Where or what is your money going towards? Instead of generally saying “I want to spend less money this year,” you should say “I want to start saving money to contribute more to my 401k or to my child’s future education.”
Measurable: How much money are you going to commit to saving? Including a specific number will help you have a clear goal in mind to stick to. A great example of this would be, “I would like to start saving $500 a month to go toward my 401k.”
Actionable: What actions do you need to take to achieve your goals? Make sure that you attach an action to the goal. It could be something as simple as setting up automatic transfers, so your bank will automatically transfer money from your checking to your savings!
Realistic: Make sure that your goal is realistic. It is easy to get discouraged from financial goals when they feel unobtainable in the timeframe you have set.
Time Bound: How much time will it take to achieve this goal? 1 month, 6 months, 1 year? Giving yourself a deadline or, better yet, a timeline will help you prioritize and stay dedicated to seeing your plan through.
Create a Spending Plan
Now that you’ve made a list of your goals, it’s time to plan. One of the best ways to do this is to write down your current spending habits. Itemize your monthly expenses, both the essentials and nonessentials. Doing this will give you a clear visual on where your money is going every month, how much you spend on nonessentials, and where you can lower costs to help meet your savings goals.
Build an Emergency Fund
Plan for the unexpected. There are few things that can throw you off track of your goals like unplanned expenses. Ass you are saving for your financial goals this year, it would also be wise to start putting some money into an emergency fund. To find out more about what an emergency fund is and how to start one, read our previous blog.
Don't Procrastinate on Financial Tasks
What can you accomplish today that will make your tomorrow easier? While there are plenty of answers to that question, here are some financial tasks you could start with:
Prepare your tax paperwork – Waiting until the last minute to prepare or file your taxes is not only stressful, but it can also put you in a precarious position if you end up owing money. Start gathering the paperwork you will need now to help make filing a smoother and less stressful process.
Fill out FAFSA – If you have a child in college and are planning to apply for FAFSA, start filling out the paperwork as soon as it is available! Waiting until the last minute could result in missing the deadline for filing if you don’t have all the paperwork in order.
Research Scholarships – Many scholarships open in January in preparation for the coming college semesters.
Get Rid of Your Debt
Paying off what debt you can, as daunting as it may be, can help tremendously with financial stress. If you have multiple sources of debt (credit cards, car, student loans, etc.), list them out from smallest to largest. Then, make it your goal to pay off the smallest source first. Smaller victories not only feel great, but they can also help you feel motivated and keep the momentum going as you move on to the larger amounts.
Automate Your Bank Account
One of the easiest ways to help stick to your savings goals for this year is to take advantage of automatic transfers and bill pay. Have your account set up so money is automatically transferred from your checking to your savings account. You can also set up automatic bill pay, have money transferred into your retirement funds, etc.
By taking advantage of this feature, you will know exactly when and where your money is going every paycheck and won’t have to worry about late fees!
Go Through Your Subscriptions
The start of a new year is a great time to sit down and look at your monthly subscriptions. Outside of your necessary bills, you might have a few charges that you no longer need or forgot about!
Many people sign up for streaming services when they have a promotional offer but forget to cancel them when the promotion ends. There are also many services you may have signed up for and since stopped using. Look at the things you pay for monthly. $5-$15 here and there may not seem like much, but when it’s multiple subscriptions each month those charges can add up!
Find an Accountability Partner
If you are someone that has a hard time staying motivated to stick with financial goals, having an accountability partner could be a great resource. This could be a spouse, significant other, parent, sibling, friend, financial advisor, etc.
Your accountability partner should be someone that understands your financial goals and the new lifestyle you’re trying to achieve. They will not only be able to help you stay on track to meet your goals, but they will also celebrate your victories with you and cheer you on when you’re struggling to say motivated!
One of the easiest ways to make sure you’re staying on track with your financial goals is to start carrying cash with you. It is way easier to lose track of how much you are spending when you’re swiping a card than when you watch the cash leave your hand.
When you go shopping, whether it’s for groceries, clothing, fun, etc., have a cash budget. You will find that you weigh your options more thoughtfully so you can stretch your dollar further.
Review and Revise Your Financial Plan
Whether you are making a financial plan for the first time or the tenth time, one thing is certain: financial situations change. Sometimes your financial situation allows for you to increase your savings, and sometimes your budget is a little tighter.
You might even find that the goal you were prioritizing at the start of the year is less of a priority halfway through the year. Whatever your situation may be, make sure you are taking the time to review and adjust your plan on a regular basis.
For more financial tips, visit our blog page.