As 2018 comes to a close, it’s time to think about your finances for the coming year. How will you pay off credit card debt? How will you budget for bigger purchases? How will you grow your retirement savings? If these are the questions keeping you up at night, take a look at our tips on laying a strong foundation for a healthy and wealthy 2019.
Use the 2 Week Rule to Curb Impulse Spending
All the eye-catching deals during the holiday season can easily pave the way for unnecessary impulse purchases. To avoid breaking your budget and starting the new year in debt, try out the 2 week rule when you want to purchase something you haven’t accounted for. Keep a list of everything you want to buy and the date when you first saw it. Once two weeks have passed, assess whether you still want it. If you do, then treat yourself! But you’ll probably be shocked by how many items lose significance after a few days pass; this is the perfect exercise for practicing financial restraint.
Transfer Savings to a High-Interest Savings Account
Instead of simply accepting the low interest rate your bank likely offers, shop around for savings accounts that have the potential to make you some extra cash. If you already have a significant nest egg saved up, transfer it over to this account to build your savings while it lies dormant. If you aren’t getting an interest rate of at least 1%, it’s time to reevaluate your account!
Check Your Credit Score Frequently
A healthy credit score is crucial for securing a home, car, or personal loan. Even if you aren’t planning on making any big financial steps this year, it’s a good idea to keep an eye on your score. Check your score once a month to make sure there aren’t any false reports that damage your magic three-digit number. If you pay off your credit cards on time, keep your debt-to-credit utilization low, and don’t constantly apply for new lines of credit, your score should remain stable.
Build an Emergency Fund
If you don’t already have an emergency fund in the works, it’s time to start storing away a little bit of cash each month. Your end goal should be to have funds that are equivalent to three month’s worth of expenses—including rent, groceries, gas, and any other recurring debts you regularly pay. While this may seem like a lot to hole away, you’ll be grateful you did this if an emergency ever strikes.
Pay for Most Purchases in Cash
In the era of credit cards and digital payments, carrying around cash is almost an ancient practice. However, paying for most of your daily purchases in cash can help you get a better idea of how much you’re actually spending. Credit cards don’t really give you any sense of the capital you’re handing over each time you buy something, and can easily lead to reckless spending habits. When you hand a physical $20 bill over to the cashier, it’s a very tangible exchange where you can see yourself losing money. If you need to be more responsible with your spending, use cash to get a better grip on the consequences of buying things willy-nilly.
Get Last Minute Health Checkups
At the end of the year, most health insurance deductibles and out-of-pocket maximums are reset. If you want to take full advantage of your health plan and get medicine or treatments for cheap, make sure to see your doctor before January 1st. Not only will this ensure you’re in tip-top shape for the new year, but you’ll also be able to save on doctor’s visits that could cost a lot once your insurance plan is reset.
Responsible money habits require diligence and sacrifice, but following these simple tips will help you lay the groundwork for a strong 2019. Make financial freedom your new year’s resolution and get ready to watch your wealth grow!