As we all start thinking about what we want 2016 to look like, many of us have financial goals for the year ahead. According to the Fiscal Times, a whopping 37% of Americans are making financial resolutions for the coming year. Since statistics show that most of us (an estimated 73%) fail at keeping our resolutions, it’s vital that you follow these tips for making successful resolutions. After I share the tips for making resolutions that will stick, I’ll talk about 7 money moves that, if you stick to them, will help you end 2016 on a wealthier note than on which you began it.
Keep the Numbers Low
I’m talking about the number of resolutions you choose to make. Statistics show that the more resolutions a person makes, the less likelihood they have of achieving those resolutions. Three is a good number to choose for when deciding how many resolutions to make for 2016, 5 should be most people’s maximum.
Make Weekly Task Charts that Will Help You Achieve Success
By having a weekly plan for reaching success with your resolutions, you keep your goals at the front of your mind, and you take consistent, regular steps to achieve those goals. After you’ve made your 2016 resolutions, create a plan that will allow you to take weekly steps to work toward achieving your goals.
Find an Accountability Partner
Whenever you make a goal, it’s important to find an accountability partner that will cheer you on, keep you on task and get on your case a bit if you drop the ball. Pick someone in your life who has a great desire to see you succeed, and who has a supportive personality yet will also call you on it if you’re slacking on your weekly tasks.
Now, onto 7 money moves that – if you take advantage of them – they will make you wealthier.
1. Beef Up Your Emergency Fund
One way to end 2016 on a wealthier note than you began it is to choose to beef up your emergency fund. Pick a percentage or a dollar amount, divide that number by twelve and add the specified number of dollars to your emergency fund each month. If you’ve already got a plush e-fund, that’s okay. The extra money will be available in case of an unexpected repair or other expense.
2. Increase Your Retirement Savings
Max out – or at the very least increase – the percentage you put into your employer’s 401k account. If that’s not an option, choose to open a Roth or Traditional IRA and put in as much as you can afford to (the 2016 limit is $5,500 for those under age 50, $6,500 for those aged 50 and over) or as much as the legal IRS limit allows. The thing about retirement savings is that you can never have too much, but it’s easy to turn a blind eye and not contribute enough toward retirement expenses. When it comes to retirement investing, overestimating is definitely better than underestimating.
3. Revisit Your Grocery Budget
According to the USDA, the average American family of four spends, on a low-cost budget, between $719 and $852 a month for groceries. The liberal spending plan has families spending between $1102 and $1287 on groceries each month. Most bloggers that I know with families manage to easily keep their grocery spending around the $500-a-month range.
Is there room for you to cut back on grocery spending? See this post on 8 Creative Ways to Save Money on Groceries and listen to this podcast for tips on cutting your grocery bill in half. Then take your monthly money savings and put it toward paying off debt or into savings or retirement accounts.
4. Open a Flexible Spending Account
If you’re expecting medical bills for the coming year, whether they be dental bills, contact lens purchases or the blessed annual colonoscopy for those over 50, putting your expected out-of-pocket costs for those expenses into an FSA will enable you to use pre-tax dollars to pay for them, saving you (at a minimum) hundreds of dollars in the new year. Don’t let medical costs burden you next year: instead, use an FSA to help cover the costs with pre-tax dollars and lower your taxable income.
5. Cut Back on Discretionary Spending
One of the biggest black holes in our finances before we discovered spend-tracking was our use of discretionary spending. We were spending nearly a thousand dollars each month on going out to eat, unnecessary grocery expenditures, cable TV and unplanned/unnecessary splurges. In order to give yourself the gift of a wealthier 2016, set a modest limit on your 2016 monthly discretionary spending, and be sure to stick to it. Then, take the amount you save monthly by cutting back and use it to decrease debt or increase savings.
6. Start Saving for Your Next Needed Car
If your car is getting older and may need to be replaced within the next 5 years, start saving cash right now to pay for your next car. Pick a monthly dollar amount to save based on how many months you think your current car will last and based on how much you plan on spending for your next vehicle. For instance, if you plan on spending $5,000 for your next car, and you expect you’ll need a replacement vehicle within 3 years, you can start putting $140 a month or so into a countdown fund savings account. This way, when you’re at the point where you need to buy the car, the money will already be in hand.
7. Pay Extra on Your Debt
Any time you pay down debt you are building wealth. Make a detailed plan for 2016 to put a substantial amount of extra money (over and above your minimum payments) toward debt payoff when you can. Even if you don’t put a dime into savings, paying down debt will lower your monthly bills and put you in a better place financially by the end of 2016.
A new year means a new start for everyone, financially and otherwise. Use this opportunity to create some goals that will make the coming year a happier wealthier one.
What are your 2016 money goals?