Managing money brings up different emotions for different people. Some people are so stressed about money that they don’t want to even think about setting a budget or a goal, let alone the specific goals they should set. Other people find the thought of paying attention to their finances boring and a buzzkill. Others still feel guilty about their spending habits and avoid tracking altogether.
No matter what your situation is, the first step towards having a positive relationship with your finances is to let go of your negative emotions about money. Take a deep breath. With the new year, set the intention to turn the page and give yourself a fresh start.
You may naturally have negative feelings about money, but now is the time to release those feelings. After all, now is the time that you’re starting to take control of your finances. These ten money moves will help you have a more positive relationship with your finances in the new year.
Visualize Your Financial Situation
If you’re just getting started with managing your finances, you might not have any idea what it looks like to be in control. The first step is a technique used in many different areas of life: visualization. You have nothing to lose but time when you visualize.
Here’s what you need to do: sit in a quiet space and imagine that you are already in control of your finances. Don’t think about having endless amounts of cash. Think about a realistic future where you are in charge of your money and your financial situation is running smoothly.
Don’t think about the nitty-gritty details of this situation. Instead, think about what it will feel like to be in control of your finances. Sit with that feeling and let it help you take the next step towards a more positive relationship with your finances.
Set Your Priorities and A Budget
Next, think about your financial priorities in the long term. Consider what you value, what you need, and what you want to have funds for. Your answers to these questions will guide you through setting up your budget.
Now it’s time to get out your calculator. There is no one-size-fits-all budget solution out there, but there are general formulas that work for many people, such as the 50-30-20 rule from Ellevest. According to this rule, 50% of your income goes towards bills and items that you need, 30% goes towards fun things you want, and 20% goes into savings.
Take a look at your current income and expenses. Could you make the 50-30-20 rule fit your lifestyle? What would you need to change?
Check Your Account Balances Every Day
Here’s a small habit that will help you take control of your money no matter what your circumstances are. Check your account balances every day. This lets you know how much you’ve already spent, and therefore, how much you have left to spend. Impulse purchases and unexpected bills can add up quickly. Even a few extra dollars here and there can significantly impact your budget.
When you check your account balances every day, you give yourself more control over your financial situation. That knowledge will help you set yourself up for success with your next day’s spending.
So, make it a habit to check your bank account (and credit card) every day. Schedule your “money minute” for a time when you won’t forget – maybe when you’re about to head out the door or right before you go in to work. By knowing just how much you’ve spent so far, you’ll set yourself up with the mindset you need to stay on track with your spending.
Save for Emergencies
You’ve probably heard of an emergency fund, but do you have one? If not, now is the time to start building this important part of your financial plan.
An emergency fund is there in case you have to pay for an unexpected expense, like a car repair or a medical bill. It’s also important to have an emergency fund in case you lose your job. That’s why many financial experts recommend that you have anywhere between three to six months of your income in this fund.
However, you ultimately have to work within the confines of what is possible on your budget, which may mean that your emergency fund equals one month’s income (for now!).
Saving for emergencies should be an intentional part of your financial process. You can set up an automatic money transfer from your checking account to a savings account on your payday. Or you can manually transfer the money on a schedule that works for you. Whatever you do, remember to save for emergencies!
Pay Down Your Debt
The new year is a great opportunity to start paying down your debt. A brand-new calendar and a fresh start may be just what you need to start tackling this major financial obstacle.
Student loan debt and credit card debt are very common. If you have either one of these types of debt or both, research both the snowball and the avalanche methods of paying off debt and choose the method that works best for you.
There are many online resources dedicated to explaining the best ways to tackle debt. The end-all-be-all is that you need to put aside enough money to make regular payments on your debt. In general, it’s smartest to tackle your highest-interest debts first, and then to work on paying down your lower-interest debts later.
Automate Your Bills
If you’ve already done this, then great! You can move on to the next step. If not, then it’s time to start figuring out how many bills you’re paying manually, either over the phone, online, or by check in the mail and start automating those bills.
Some companies, such as car insurance companies, will give you a discount when you sign up for an auto-pay arrangement. Even if you don’t get a discount, it’s still a good idea to automate your bills. You won’t have to stress out about late fees or other issues because you know that the money will be withdrawn or charged on a regular schedule! That’s less for you to remember and to worry about, which is always important!
Save for Specific Goals
As you work on your finances in the new year, think back to the budget you set for yourself and the decisions you made about what you value. If you value traveling, for example, it’s a wise idea to save specifically for your next vacation (or two, or three…).
Your bank may allow you to digitally set up an “envelope” style system where you can earmark money as saved specifically for travel, or for a down payment on a new car or a home, or for an important purchase. There are also specific financial tools you can use for this purpose where you can designate a savings category and transfer funds into it.
Check In Each Quarter
It’s also a great idea to check in on your finances each quarter. Take a look at your calendar for next year now and schedule a money check-in with yourself for winter, spring, summer, and fall.
During this check-in, take stock of how much you have in each of your accounts. Look closely at how well, or poorly, you stuck to your budget. Look at the progress you have or haven’t made on your savings goals.
Write down what you discover about your financial situation. If you haven’t made the progress you were hoping for, then plan out what you’ll do to fix that going forward. If you are reaching your goals or even exceeding them, take the time to congratulate yourself on your hard work.
It’s Okay To Buy the Latte
It’s become somewhat of a legend now that if you don’t spend money on fancy coffee drinks, you’ll somehow end up a millionaire. Financial experts have tested this math out again and again, and it simply isn’t true.
You can buy yourself a latte – or a fancy pastry, or a small present – and your finances will recover from the $7 hit they took. Your latte habit isn’t keeping you from being a millionaire – and don’t let anyone tell you that it is!
Investing can be a scary word for some people; however, with the right tools, you shouldn’t be afraid of this important financial tool. On a basic level, when you invest, you take the money that’s sitting in a low-interest-earning savings account and give it the potential to bring back much higher returns.
Investing used to be a difficult part of the financial world to break into, but now, it’s much easier. You can use a web service/app like Robinhood or Betterment to begin your investing journey, or you can speak to a banker or financial advisor.
To have a positive relationship with money, it’s important that you take the time to think hard about what you can actually do and what won’t work for your lifestyle. Practicing smart money moves like the ten we’ve listed here will help you live a happier life in the new year!