The jovialities of the holidays are behind us and the possibilities of the New Year lie ahead. By now, many of us are shopped out and overfed — craving cleared social calendars and some quiet time. But your action during the first few weeks of January could determine the difference between a year peppered with the same old struggles and a year that puts you on the path toward financial freedom.
Instead of settling onto your couch for a weeks-long television binge, use this time to complete these financial to-dos before month’s end to make a positive impact on your finances in the year ahead.
Analyze last year’s successes and opportunities.
Did you make great gains in paying down your credit card debt and building your savings last year? Or did you max out credit cards and watch every penny you earn go right back out the door again? Whether the previous year afforded you financial gains or setbacks, now’s the time to look back and determine what worked for you and what didn’t.
Use a spending analysis tools like FinanceWorks to examine your income, spending, debt, savings and net worth. You just might find that you’re spending too much on impulse buys and takeout, that your car loan or mortgage payment is too high and it’s time to refinance, or that your credit card use outpaces your efforts to pay down your debt.
Set attainable goals for the New Year.
Based on what you saw when analyzing your income, spending, saving, and debt, determine an attainable goal for the coming year. Just be sure that your goals aren’t too broad. Instead set goals that are realistic, specific and measurable. Then create an overarching budget for the year that incorporates these goals and your planned expenses.
If you’ve found that you have several opportunities for improvement, prioritize your goals. For example, if you have little-to-no savings and you have credit card debt, you’ll want to get at least $1,000 saved in an emergency fund first. That way a flat tire or a call to the plumber won’t cause a panic. Then you can focus on steadily paying off your credit card debt.
Create an automated savings plan.
If paying yourself (a.k.a. contributing toward your savings) isn’t already a monthly habit, there’s no better time to make it a priority. And best of all, you can keep it going all year long without much effort if you automate your contributions through automatic savings deposits and enrolling in ¢hange it up.
Max out your IRA and increase your 401k.
During the first quarter of the year, some employers dole out annual cost of living and performance pay increases — making this a great time to increase your 401k contributions by a percentage point or two. That way you won’t notice much of a difference on your paycheck once your raise kicks in.
If you have an IRA, you have until April’s tax deadline to max out your contributions for the previous year and still enjoy the tax benefits on that return. If last year’s IRA is already maxed, then use those funds to make the most of this year’s contributions — with an early start, you can make even more gains toward your retirement savings goals.
Take action on your taxes.
Begin gathering and organizing all of the documents you’ll need to file your taxes, such as your W-2s 1099s, 1098s, medical records, tuition receipts and charitable gift documentation. Simply create a safe and secure spot to store these items as they arrive, and it’ll make your life a lot less stressful when it’s time to file.
If you’re a homeowner, be sure to apply for your homestead exemption if your local government offers one — it could save you a big chunk of change on your property taxes later in the year. The deadline to apply in Florida is March 1, 2018.
Lastly, if you’re employed, double check your income withholdings to ensure you’re not electing to have too much or too little withheld from your paycheck.
Check your credit.
Every 12 months you can get a free copy of your credit report from Equifax, Experian and TransUnion. If you make it a habit to request yours every January, you can begin to track changes, look for fraud red flags and add paying off delinquencies to your annual budget.
Shop around for a better deal
Make searching and asking for better prices a yearly affair after New Year’s. In many cases, you could be paying less for services like insurance, internet and cable if you ask the right questions and take the time to shop around.
This is also a great time to determine if you’re paying for subscriptions and memberships that you’re not using — like gym memberships, gaming sites and satellite radio — and cancel them as soon as possible. The savings could add up to hundreds of dollars over the course of a year.
Need a little guidance in reviewing last year’s spending and creating a plan to save more or reduce your debt in the coming year? Stop by your nearest branch and a crewmember will be happy help set you on the right path.