The new year is right around the corner and with it, a whole new set of resolutions. But why wait? There’s still time to reshape your financial life before the ball drops and the Champagne toasts begin. Here are 10 financial resolutions you can conquer before New Year’s.
1. Clarify your money goals
Success will always be elusive if you don’t define it. Get specific about the goals you want to accomplish in the short-term (within the next year) and the long-term (beyond three years). Do you want to pay off credit card debt in the next six months? Do you want to save for a down payment on a home in five years? Write down each objective and include the mini-milestones you need to hit along the way.
2. Build a budget
Don’t let the word “budget” strike fear in your heart. The best ones are simple, realistic, and flexible. With your short and long-term goals in mind, develop a budget that accurately reflects your income and expenses. Refine as you go; some variable expense categories can be reduced and others may need to be expanded. (See also: Build a Better Budget in 5 Minutes Flat)
3. Cut your spending by 5 percent
Look for ways to cut your spending by just 5 percent starting next month. Can you finally cancel that unused gym membership? Switch to a cheaper cellphone plan? Brown-bag your lunch three days a week? All of the above? The percent you save is less important that simply being able to consciously change your spending habits. (See also: Boost Your Savings With This Easy Budgeting System)
4. Don’t incur any new consumer debt
More debt means more interest, more stress, and fewer options in the new year. Put the credit cards on ice. Switch to cash if it helps control your spending. (See also: 11 Good Money Habits That Will Keep You Out of Debt)
5. Prioritize (and attack!) existing debt
Once you’ve cut your spending 5 percent, funnel the extra money toward paying down debt. But be strategic: Prioritize what you owe based on the interest rate and attack the highest interest debt first. (See also: 5-Day Debt Reduction Plan: Pay It Off)
6. Open an IRA
Whether you choose a traditional or Roth, an individual retirement account can provide valuable tax advantages that make saving for retirement easier and much more effective. Start now. If you’re under age 50, you can contribute a maximum of $5,500 in 2017. (See also: 5 Retirement Accounts You Don’t Need a Ton of Money to Open )
7. Start building an emergency fund
Life is unpredictable. Having an emergency fund large enough to cover three to six months’ worth of living expenses is a smart strategy. It can help you weather a layoff, cover an uninsured medical expense, or deal with an urgent household repair. Not sure how to begin? Explore some simple ways to build an emergency fund from $0.
8. Start saving your change
Every time you pay for something with cash, pocket the change and save it. Stash all those coins in empty coffee cans or Mason jars. At the end of the year, you’ll likely have a few hundred dollars to bulk up your emergency fund or IRA. (See also: Spare Change Apps — Are They Worth It?)
9. Get serious about a side hustle
There are two ways to improve your financial position: spend less or make more. And if you really want to shake things up, do both. Brainstorm ways to earn extra income outside your 9-to-5 job. The cash can be used to pay down debt or invest. (See also: 14 Best Side Jobs For Fast Cash)
10. Try shopping secondhand
This resolution may surprise you, but I’m a firm believer in the power of thrift-shopping. Buying quality goods secondhand can save you thousands over the course of a year. Expand your consumer horizons and make paying retail your method of last resort. (See also: 31 Reasons I’m in Love With Thrift Shopping)