Starting a new year is like a blank check: lots of potential but you need to plan out how to spend it. As with January and fresh beginnings, this is the time to make decisions that will send waves through the months to come. January is notorious for resolutions to lose weight or declutter, but your financial health deserves a moment in the spotlight.
Consider this month the time to set the tone for a year of less stress and more stability. You don’t need sweeping changes, or overnight success, it’s the small, consistent efforts that win big. Well, grab your cup of coffee or tea and let’s unpack some simple but powerful strategies for your money.
Review Last Year’s Spending
Your goal can’t be vague, like “save money.” Instead, think of your goals as road trip travel destinations—specific and intentional. Whatever you’re saving for, be it a vacation, paying off credit card debt, or building an emergency fund, write it down and give it a deadline. Putting your goals on paper turns them into something tangible. It’s like setting a finish line you can see, making the journey toward it more focused and achievable.
Negotiate Your Bills
Just a polite phone call will do wonders for you. Many businesses are open to renegotiating rates with you, from cable providers to insurance companies, and if you’ve been a loyal customer they’re all the more likely to be willing to do so. If haggling isn’t something you feel comfortable doing, there are apps like Truebill or Rocket Money that can do the negotiating for you. It’s a win–win situation for your wallet and for your peace of mind.
Plan for Tax Season Early
April taxes are like a term paper in college: easy to procrastinate, hard to finish. The stress free window in January allows you to gather documents and review potential deductions. Did you donate to charities, freelance, or pay your student loans? At least having your ducks in a row now will lead to fewer headaches later. It reduces your chances of missing a refund.
Build or Revisit Your Emergency Fund
Life doesn’t always play by the rules, as we’ve learned if last year taught us anything. Car repairs that come out of the blue, a medical bill we weren’t expecting, or a leaky roof are just some examples of how this can happen. Ideally, you should aim to keep your emergency fund covering three to six months of your living costs. Don’t be scared by the big number – start small. If you set aside $10 a week, you’re going to have a safety net faster than you think.
Audit Your Subscriptions
How many streaming services are you actually paying for? The gym membership you were ‘definitely’ going to utilize every day since last January? Take a hard look at your recurring expenses. Canceling underused subscriptions is like finding money you didn’t know you had. The average American spends $273 per month on subscriptions services, according to a study done by West Monroe Partners. That’s almost $3,300 a year that could be put to better use if the subscriptions are not utilized.
Maximize Your Retirement Contributions
January is a good time to revisit your retirement accounts, whether you’re playing catch up or starting from zero. If you contribute to 401(k)s or IRAs, you’ll want to check the new contribution limits as these often adjust annually. Compound interest is your friend and even a small bump in your contributions can make a big impact. Called by Albert Einstein some time ago as “the eighth wonder of the world.”
Set Clear Financial Goals
A vague goal like “save money” won’t cut it. Instead, think of your goals as destinations on a road trip—specific and purposeful. Whether it’s saving for a vacation, paying off credit card debt, or padding your emergency fund, write it down and give it a deadline. A recent study by Dr. Gail Matthews at Dominican University found that people who jot down their goals are 42% more likely to achieve them. A little ink on paper could make a world of difference.
Invest in Yourself
Cutting back on spending isn’t the only aspect of being financially healthy; it’s also about leveling up. From a course to propel your career or a tool to get started with a side hustle, investing in skills can pay off for the long run. According to Pew Research, individuals who upskill or retrain see an increase in earning potential within two years. There are times when the best investment you can make is in yourself.
Set Up Automated Savings
Out of sight, out of mind is great for helping you save money. Automatically set up transfers to a savings account on a payday. You don’t need to make a fortune, every $25 per paycheck counts. Automating takes the temptation to spend away and has you feeling that warm, fuzzy responsibility without lifting a finger.
Pay Off High-Interest Debt
Interest is a financial black hole slowly eating away at your money. First, look to pay down high interest debts, such as credit cards. Small wins or big hurdles first, depending on what motivates you, the snowball or avalanche methods can help. Either way, January gives you a chance to get back in control and stop feeling like you’re treading water.
Evaluate Your Insurance Coverage
It’s been awhile since you’ve looked at your insurance policies. Marriage, kids, a new job, or any life change means your coverage needs an update. Make sure your health, home, auto and life insurance policies match your current situation by reviewing them. It’s just a little bit of effort and it will save you money in premiums down the road and you won’t have any headaches.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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