Is getting your shit together with money one of your new year’s resolutions? You know you need to start #adulting, but may not know where to start.
I reached out to the top personal finance bloggers to get their suggestions of what money goals should make it on your list. Here’s the verdict straight from the pros.
Money Goal 1: Max out your Tax-Advantaged Retirement Plans
This seems like such a “I’ve heard this before” type of goal, but if you didn’t max out your Roth/401k last year, you’re missing out of some serious benefits. A Roth IRA (individual retirement account) is when you invest after-tax dollars into an account through which you do your investing. With a Roth, your money is able to grow TAX-FREE! If your brain isn’t wrapped around this concept yet, do a bit more research. It’s very powerful.
What the pros say:
Philip Taylor- ptmoney.com: “Max out your Roth IRA. It’s $6,000 for the year, which is $500 each month.”
Money Goal 2: Pay off debt
Not only does being debt-free allow you to more easily max out your Roth, it also alleviates a ton of unnecessary stress. Typically paying off the debt with the smallest balance works best because it gives you fast results and helps you commit to your plan long-term.
Jackie Beck– “Commit to only spending money you already have, and gradually pay off existing debt. Life is so much less stressful without debt hanging over your head!”
Murray Newlands, Sighted.com- “A new presidency brings uncertainty; reduce your debts and you will reduce your debt in uncertain times.”
Money Goal 3: Be self-aware with money
We go through life like we go through the grocery store while hungry; rushed, directionless, and buying whatever looks good at the time. This is the year to change that. It all starts with self-awareness. The best place to start is by keeping a spending log and writing down each and every purchase/transaction that comes from your checking or credit card. Download the free money tracker and read why it’s so important in this post.
What the pros say:
Nick True- Mapped Out Money: “Become more self-aware with money. Spend six months pondering, tracking, thinking, and understanding your personal desires around money and how you emotionally deal with money. The goal should be to become more self-aware of how money emotionally affects you and what expenses are absolutely most important to you.”
Money Goal 4: Get a six-month ‘oh sh*t’ fund
You always hear a range of three to six months of emergency savings. So here’s the downlow. If you have a life that is inherently riskier you need at least six months. If the company you work for notoriously has layoffs, your job is with a startup, you are a startup, or even if you just value financial security, you need six months of living expenses.
What the pros say:
Eric Rosenberg– Personal Profitability: “If you don’t have enough saved to cover three to six months of expenses, it’s time to get saving. The economy is likely going to change in the new year, and with uncertainty comes even more reason to make sure you are safe in case of a loss of income or an unexpected expense like fixing a broken down car or replacing a bad furnace. Get saving!”
Money Goal 5: Start with a $1,000 ‘oh sh*t’ fund
Does the idea of saving six-months savings scare the pi$$ out of you? I get it. Remember, this is all about baby steps, so just start with a goal of hitting $1,000 in your savings account. Then start slowly building it up from there.
What the pros say:
Kate Dore, Cashville Skyline– “Building an emergency fund is the primary money goal I am recommending. Start with $1,000 and work toward saving to 3-6 months of expenses. In 2016, I was hit with an unexpected job layoff. My emergency fund helped me quickly pivot from unemployed to self-employed.”
Money Goal 6: Max out your HSA
Do your homework on this one. Health Savings Accounts (HSA) can be great if you have a qualified, high deductible health insurance plan. If your deductible is a $1,300 or higher (as an individual), you can use an HSA account. It allows you to save money for your health tax-free if you are using it for legitimate health care purchases.
What the pros say:
Miss Mazuma- MissMazuma.com: “Max out ALL available accounts – 401k, HSA, Roth IRA, etc.”
Are you seeing a trend here?
Money Goal 7: Start investing now
Like, right now, right now. Again another broken record, but really important stuff. This is on the top of every over 60s’ financial regret list. They wished they invested sooner. The primary reason now is the most important time is 100 percent due to compounding interest.
The more you invest, the more you earn. The more you earn, the more your earnings earn earnings. (Say that five times fast.)
Not sure where to begin? Nav.it recommends a few options in this article. I personally do all of my retirement investing through Betterment, a robot-advisor. It’s pretty sweet. You’ll get six months with no fees by signing up using this link.
What the pros say: Joseph Hogue, CFA- My Stock Market Basics: “Start investing NOW! Stop putting it off until you’re debt free or ‘have’ the money. Just investing $50 a month can grow to nearly $100k in 30 years, but you have to start.”
Megan Brinsfield, CPA, CFP- FoolWealth.com: “Change and uncertainty can make people anxious about investing. Rather than sitting on the sidelines waiting for the “right time” to invest, make a plan to contribute regularly to your investment accounts.”
Money Goal 8: Boost your income
Start small. (Check out some side hustles here.) If boosting your income sounds terrifying to you, set a goal of making an extra $100 a month. Do that for a couple months, then start building up to $150. Rinse and repeat. Maybe you are selling your old clothes. Maybe you are shoveling snow from your neighbor’s driveway, or mowing their lawn. Just find a small way to make a little extra money.
What the pros say:
Robert Farrington- The College Investor: “My favorite money goal to challenge people to achieve is to boost their income by either a dollar amount or percentage amount. For example, set a goal to earn $100 more per month on the side. By setting and achieving this goal, it opens the door to achieve many more goals.”
Money Goal 9: Automate
The secret sauce for a successful financial life is to set up a money system. Schedule your bills for automatic payment every month, set your retirement accounts so you are automatically investing money, and build your savings up by setting an automatic withdrawal to a designated account. Automate as much of your financial life as you can so you can free up your mental energy to focus on something else.
Money Goal 10: Save more than you spend
Raise your hand if you are a spender not a saver. *no shame* To really enjoy life and not stress quite as much with money, you need to have money in the bank.
The best way to do it is schedule automatic savings withdrawals from your account, as mentioned in goal nine. However, if that is a struggle for you, try an app to do the automatic savings for you. (And if you’re saving up for a specific goal, use the Nav.it app to find out how much you’ll need to save daily, weekly or monthly to reach that goal).
In the past I’ve used Qapital, which allows you to make savings easy and fun through gamification. Iset up the 52-week savings challenge and round up rule to get my savings goals met and was able to save over $3,600 within 18 months through this app– and I didn’t even miss that money.
What the pros say:
John Rampton- Due.com: “There are many apps now available that let you start incrementally saving specific amounts that automatically get pulled out each week or month and put into a retirement, savings, or investment account. Rather than spend $20 a week on coffee or some other insignificant expense, take that money and put aside so you pretend like you don’t have it and then watch it grow!”
Money Goal 11: Live on a budget
Budgets get a bad rap, but they are the pinnacle of financial success. You’ve got to manage what you currently have or you’ll always be broke.
Create a budget and then stick to it, and you’ll start seeing results. If you have tried and failed before, check out my hot off the press course on budgeting. It goes through the step-by-step process of how to create a values-based budget that allows you to spend heavily on things that matter to you and cut out all the other crap.
What the pros say:
Gary Weiner, SuperSavingTips.com – “If you don’t have a budget, make one. And if you do have one, live within it.”
Jen Hemphill, Her Money Matters – “Create a dream budget with a dream income and the expenses you’d have for the lifestyle you’re striving for.”
Money Goal 12: Pay yourself first
Paying yourself first means prioritizing what matters most to you. It’s saving for retirement before paying your bills. The important key to remember is that you may need the money right now, but you’re going to need it even more later. Prioritize your financial life first.
What the pros say:
Rachel Hernandez- Adventures In Mobile Homes: “Pay yourself first. Set aside at least 10 percent of your income for saving/investing.”
Money Goal 13: Use your vacation time
In 2015, 55 percent of Americans didn’t use their vacation time. What the heck guys? This is an important part of life. We work our asses off getting our financial lives in order, saving money, and paying off debt, so that we can enjoy life. Don’t let life be all work and no play.
And it doesn’t have to cost a lot either. I take trips all the time while working 60+ hours a week, living on less than $30K a year. If it’s important to you, you’ll find a way. (Make sure this happens by picking a date on the calendar now and using the Nav.it app to figure out how much you need to save to fund your much-needed getaway!)
Money Goal 14: Build your credit
Credit is an important part of your financial life. I hate that it is, but it’s the world we live in. At some point, you will want to buy a home, and they are going to give you a rate directly based on your credit.
So it’s time to get it together, and prioritize building your credit. Look, you know I dislike debt, but you can still build your credit score without taking out debt. Try opening a credit card (or using an existing card) and only putting Netflix on your card. Then schedule an automatic payment from your checking to pay off your $9 balance. Boom. You’re building credit.
Seriously. You don’t need to carry a balance (and shouldn’t). You don’t need to have debt. You just need to be wise about how you do this.
*Note- I DO NOT recommend trying to build credit before you prove you can live on a budget and manage what you currently have. That’s just a recipe for disaster.
Money Goal 15: Attend one conference
If you aren’t a conference-goer, you are missing out on some powerful networking and educational opportunities. Choose a conference that sounds interesting to you. Go there, meet people, have a good time and learn something.
If networking scares the shit out of you, choose a smaller conference to start out with. It will be a more intimate setting, and you will build closer relationships without feeling like you have to go through the awkward “how’s the weather” small talk.
Remember- your network is your net worth. Put yourself out there!
Money Goal 16: Ask for a raise
…with the caveat of IF you truly believe you deserve one. Being at a company for a set amount of years does not entitle you to a raise. At all.
Here’s my recommendation, put together a folder that includes all the certifications you have, any raving customer reviews, testimonials, new skills you have learned, projects that illustrate how you have gone above and beyond your job description, and then most importantly how you have directly contributed to the company’s growth.
Then request a meeting and present your folder in a logical way, share why you believe you are warranted for a raise. Keep it professional. Because you bought an expensive new house or just had a kid should NOT be a factor in this conversation. If your manager says no, respect their answer and ask what steps you can take over the next six months to earn a raise.
People get this money stuff wrong all the time. It’s not about deprivation. It’s about fulfillment. You can have anything you want, but not everything.
Look at your current financial life. Are you happy with how you are spending your money? Do you care about eating healthy but you are always spending money eating out? Do you say travel is important, but you are spending on new clothes that would be “so cute on XYZ trip” instead of actually taking the trip? Get your values in check and reallocate your funds to make sure you are spending on what brings you the most joy.
Use the Nav.it app to do inventory on how you’re currently spending and think through how you’d like to make some changes with a few reasonable adjustments.
Money Goal 18: Start a side hustle
Side hustling is super important for multiple reasons. 1) You make extra cash which can go toward paying off debt or boosting your savings. 2) You learn new skills that can lead to higher life satisfaction AND potentially new careers paths that pay more in money and emotional joy
Money Goal 19: Opt for higher quantity over quality
I recently went through a decluttering phase. After looking around my house and seeing how many clothes and items I was donating, and I had a reality check. My life had turned into one of materialism.
I would buy fast fashion because it was cheap and didn’t even think about how the items were made or where they came from. When I noticed how much stuff I was donating because I bought it when it was “in style” and now isn’t, I was disgusted. I probably wasted thousands of dollars on stuff that I thought would make me happy but ironically was just bumming me out now.
Now I opt for classic pieces that are going to last for years and never go out of style– and sometimes they might cost a bit more, sometimes they don’t. Always inspect the seams, stitching, and fabric to see if this is an item that’s going to be durable or quickly fall apart.
P.S. You can also get really great staple pieces at thrift stores or on apps like Poshmark. You have to do some digging, but there are out there, and you can save a TON of money.
Money Goal 20: Start having money dates
Money dates are a key indicator if someone will be successful with budgeting or fail with it. I find those that pay attention, get results. Money dates can be incorporated into your weekly routine and help you stay on track with your money plan.
To structure your money date:
Put a 30-minute recurring calendar appointment on your calendar of choice for the same time and day each week. Consistency and training yourself to check in at the same time/day each week is everything.
Light a candle and make yourself a fancy latte (booze optional). My favorite thing to do is light my expensive candle and make a salted caramel latte with my Nespresso machine. Money dates are a mood.
Login to your bank account and/or CC (or fave money management app), and add up how much you’ve spent on different categories for the week. For example, I add up how much I spent on Eating Out, Groceries, Gas for Car, Entertainment, as well as my fixed expenses.
Subtract your exact weekly spending from your budgeted amounts to see how much money you have left to spend per budgeted categories. For example, if I budgeted $150 for Eating Out and I have spent $50 this week, and $30 the week before, I only have $70 for the rest of the month to spend.
Visualize and review your financial goals. Review your goals by reading through each of them, doing a quick check to see if you’re on track for your goals. Then close your eyes and imagine the feeling you’ll feel when you accomplish these goals and the journey to accomplishing your goals.
We’re excited to bring you different tools to maximize the funds you have with account aggregation, automated savings, and budgeting tools inside the nav.it money app.