There's no better feeling when it comes to fresh starts than ringing in the new year. While your head may be spinning with resolutions, don’t forget about your finances.
Setting financial goals may feel intimidating, but it doesn’t have to be. Here are four ways to start the year on the right foot.
Get a Fresh Beginning With Your Budget
The new year is a time for a new beginning, starting with your budget. Start the new year with an audit of your spending. Here’s how:
Step 1: Gather Your Documents
Before you can move forward, it’s time to look back. Using budget tracking software to look back at the past few months of spending between three to six months should be enough. Or, print out a few months of bank statements to see where your money’s gone.
Look through your transactions and highlight different categories of spending. For some, it helps identify patterns, which can help uncover areas of improvement or overspending.
Step 2: Identify New Expenses
Even with a budget, your spending habits tend to change over time. At the same time, you’re looking at transactions and noting categories where you’ve been over or underspending. If you repeatedly overspend in a category, allocating more cash each month might make sense.
Similarly, inflation, rising rent, or the cost to fill your tank can change over time. You'll just continue to overspend if you don’t have the proper budget for these categories.
On the other hand, you may be underspending in different categories and could be allocating that cash elsewhere.
Step 3: Revisit Goals
With an audit and a new budget under your belt, it’s time to revisit financial goals. Did you meet them? Fall short? Exceed? Time to evaluate progress and decide how to move forward.
You hoped to put more towards your monthly loan payments but fell short by a few bucks. Consider looking at your new budget and figuring out how much you can afford to put towards this goal.
If you’ve succeeded in a goal, it may be time to start another, whether saving for an upcoming vacation or adding more to retirement savings each month.
Step 4: Eliminate Waste in Your Budget
You’ve got a budget and goals. Now it’s time to figure out how to reach them. Take a look at your spending over the past few months and see if there’s any waste you can eliminate. It could be an underused gym membership, expensive parking, or unused streaming services.
While budget “waste” may save a few bucks a month, it can add up fast.
Step 5: Set Up Your Next Audit
What good are goals without a proper follow-up? Put another audit on the calendar in the next few months. Bonus points if you can make it something you look forward to doing, whether that means sipping on a fancy coffee while you review finances or treating yourself to a treat after you wrap it up.
Set a New Financial Goal
A new year brings lots of new energy and excitement. Harness that excitement into a new financial goal.
It could be eliminating credit card debt or building an emergency budget. No matter what it is, make sure the goal is achievable and attainable. If you set your sights too high, you may be discouraged when you don’t reach them.
Revisit Retirement Contributions
Setting up retirement contributions is a huge step to begin with. The new year can be a good time to revisit allocations or even start saving for the first time.
Your first step should be reaching out to HR at your job. Does your employer offer any retirement benefits, such as matching? If you’re not taking full advantage of these benefits, you’re essentially leaving money on the table.
If you already have contributions, consider upping them in the new year. As they’re typically pre-tax, you may not even notice the money missing from your paycheck.
Get Your Student Loans in Order
Right now, the future of student loans is uncertain for many. The payment pause for federal loans may have been extended, but it’s never too early to figure out how you’ll tackle payments in the future.
Things may be up in the air regarding Biden forgiveness, but if you’re waiting on federal student loan forgiveness to be determined, take these steps to prep, no matter the outcome:
- Revisit your loans if you haven’t been paying them during the pause. Make sure you can log in, check your balance, and look at your status. A simple refresher can put everything in perspective.
- Figure out if you qualify for federal student loan forgiveness if it goes through.
- Look into IDR adjustments. This program can be complicated, but this one-time adjustment to IDR and PSLF could retroactively grant you forgiveness.
If you’re looking for other ways to pay down your student loans faster, check out Chipper. The #1 app for student loans offers tools like Round-Ups and Rewards on top of easy-to-use tools to help determine if you qualify for student loan forgiveness or an income-driven repayment plan.
The new year is an excellent time for new beginnings, which includes your finances. Even small steps today can set the stage for a better year ahead. Check out Chipper to start your year on the right foot.