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6 Financial New Year’s resolutions you can actually keep
It’s the start of a new year, and in keeping with tradition, it’s an ideal time to turn over a new leaf that will lead to positive change. Millions of people will resolve to lose weight, get organized, quit smoking, or spend more time with family.
Right in the middle of the most popular New Year’s resolution pack is financial fitness—in other words, save more, spend less. But, let’s face it. With the glow of the holiday season fading fast and the inevitable arrival of last month’s bills arriving in your mailbox, it’s an admiral goal, but a tough challenge.
Like exercising, though, financial health is something you need to visit every day. It’s not a one-and-done achievement. So, in the spirit of the resolution season, here are some realistic financial goals you can set and keep in 2019:
1. See where you stand
Before you can make any changes, you need to know what you own and what you owe. Use a spreadsheet to record your assets and liabilities including your home, car, savings, and investment accounts, medical, dental, life, auto, and home insurance policies, revolving credit, automated subscriptions, services like pest control, lawn maintenance, TV, internet, and phone charges…and anything else that involves money coming in or going out the door.
Now, what do you need and what can you do without? Talk with your insurance agent to make sure you have enough–or if you have too much–home or car insurance. Can you find a more reasonable internet/phone provider? Is your dental plan worth renewing or should you downgrade your medical coverage? Can you mow your own lawn? Is your Amazon Prime membership worth the annual cost?
Yes, it’ll take time, but knowing how much money you have, where it goes, and what value it brings will be the basis for almost every other financial decision you make this year.
2. Build up your emergency fund
An emergency fund is like insurance. You may not need to use it any time soon, but it’ll save your financial life if you do. You could be living comfortably at the moment, but whether it’s an unexpected home repair, sudden job loss, or large medical expense, it can cripple your financial stability. Start by saving a few dollars a week and keep building until you have at least three months of living expenses. And just so we’re clear, replacing your standard TV with a 65” flat screen does not qualify as a home repair. Just sayin’.
3. Create and stick to a budget
The old “stick-to-a-budget” advice. But listen: the amount of Americans who spend their hard earned money without a budget in mind is astronomical, and it’s a big reason our finances are a major source of worry and concern.
Believe us, we know. In the beginning, budgets are tough. You’re used to whipping out a credit card at Starbucks, buying the newest technology because it’s cool, or spending money on your designer shoe habit. If those things are important to you, you don’t necessarily have to do without them—just budget for them.
A budget realistically balances your earnings with your spending, saving, and investment goals. It helps you avoid overspending, allows you to live within your means, and alleviates financial stress and worry.
When you’re aware of how much money is available, you’re able to make smarter financial decisions that lead to a much happier life. And we all want that, don’t we?
4. Pay down your debt
Life is expensive, you need certain things, everyone has it, so some amount of debt must be fine. Debt can be used for good—like when you need a mortgage, but, it can also spiral out of control.
Revolving debt that continues month after month after month can be detrimental to your financial health and could hinder any financial progress, whether it’s your emergency savings, investments, your mortgage, retirement, or even saving for a vacation.
Be diligent about paying it down every single month and track your progress. It may not be gone by the end of the year, but if you’re committed, you’ll not only make a significant dent, but you’ll be able to sleep a little better at night.
5. Stop buying stuff you don’t need
Selling your unnecessary or no longer used stuff is one way to recoup a small amount of what you’ve spent on these things, but the best way to regain that money is to avoid buying it altogether.
Do less shopping and more relaxing. Use that time for more constructive efforts, like investing it in a hobby or spending more time with friends. The next time you find yourself ready to make a purchase, ask yourself how often you’ll use it.
Is it work the expense? Will it make your life better? Do you own something similar? Is it a real need or just a want? Eventually, you’ll find yourself spending less and living more.
6. Create an additional income stream
Any side hustle can help you pay down debt, increase savings, build your investment portfolio, or even retire at an earlier age. Turn a hobby into a small business, turn your talent into freelancing, sell your stuff on eBay or your creativity on Etsy.
Find something you love and figure out how to make money doing it. Be a personal shopper, a babysitter, or a handyman on weekends. One caution, though. Don’t sacrifice your performance at your full-time job and be careful to balance your work and home life. Making extra money should be a bonus, not a dreaded chore.
It’s not an all-or-nothing mentality
Resolutions aren’t easy to keep. In fact, more than 80% of people give up by February, and we can understand that. When you set unreasonable expectations, the first sign of failure offers you the permission you need to return to your old habits. Each of these financial goals, though, is a work-in-progress. Did you blow you monthly budget on a Super Bowl party? Spent this week’s emergency fund deposit on a Starbucks run for the office? Splurged on some after Christmas shoe sale? Don’t give up, simply get back on track. Practice makes perfect, and one misstep doesn’t mean it’s all over.
Make the commitment, work on getting your finances in order, and 2019 will be a stellar year!
A Quick Guide to Becoming a Freelancer
Freelancing comes with endless freedom, but also endless responsibilities. Businesses have accountants, marketing teams, benefits administrators, and everything in between. However, if you want to be your own boss, then these responsibilities fall on—you guessed it—you! Before taking the plunge into freelancing full-time, consider sticking with your day job with a steady income until you get your footing.
Before you can begin your freelance career, you need to figure out what it is you want to do. What are you good at? What do you enjoy doing? Why do you want to freelance? Can you afford it? How do you plan to present your “brand” to future clients? Who is your target audience? Asking yourself these questions will help set you up for success in your field. Most companies and start-ups want a specialist to complete the job – wouldn’t you? Decide what your biggest selling point is and go from there. If you love graphic design, think of one area that you’re best at. Maybe your niche is designing graphics for t-shirts, but consider who those t-shirts are for. Continue narrowing down your market so you can brand yourself as a specialist in whatever field you’re in. This will allow you to build a dependable reputation and control how clients perceive you.
Showcase your skills by creating a portfolio or a website that features your best work. When a potential client sees your website, they’ll want to see your past experiences, your personality, creativity, and, most importantly, how to contact you. Keep your website domain name and social media handles consistent so it’s easy for potential clients to find you. Your online presence is often the first impression a new client will have of you, so make sure it’s professional, consistent, and on-brand.
Now that you have some of the groundwork out of the way, it’s time to start selling yourself and landing gigs so you can start earning money. If you already have a few clients lined up, great! If not, there are job sites for freelancers to help you get started. Ask friends and family for referrals, and consider reaching out to companies directly to offer your services.
Managing money as a freelancer can be tricky, especially when you’re just starting out, since you won’t know how much income you’ll have and how steady that income will be. Now’s the time to put on your accountant hat and start to develop a monthly budget. Start by tracking your revenues (income) and expenses. Find your monthly income by adding everything you’ve made in a year and then dividing it by 12. This will give you a rough estimate of how much you can spend and save each month. Each time you get paid for a freelance project, write it down, and every time you purchase an item to complete a project (e.g., a Photoshop subscription), write that down, too. Keep track of all of your fixed expenses, like rent, insurance, car payments, etc. Create a spreadsheet or use an app like Mint to track and organize your income and expenses.
If your budget is doing its job, you should be earning more than you’re spending. It’s tempting to use that extra money for travel or fun activities, but it’s more important to start saving some money and funneling at least 30% of every paycheck into a separate account to cover self-employment taxes. Don’t forget about retirement (you do want to retire, right?) – consider contributing to Individual Retirement Account (IRA) each time you get paid for a project. Your future self is already thanking you!
Freelancing is an enticing choice for many reasons, but it’s still a huge career choice that requires a lot of work, especially in the beginning, in order to be successful. If you’re ready to make the leap, congrats! If you’re still on the fence, why not freelance part-time to see if it’s right for you? After all, freelancing is about flexibility and freedom.
With Money Goals, Multitasking Pays Off
Tackling money goals one at a time cost financial literacy expert Barbara O’Neill at least $1 million.
That’s how much O’Neill, a distinguished professor at Rutgers University, figures she lost by starting saving for retirement only after she had created an emergency fund, bought a car with cash and purchased a home.
“I tell students that eventually, 30 years later, I hit the million-dollar mark, but I could’ve had $2 million,” O’Neill says.
Too often, financial experts say, people want to attack their money goals one at a time: “As soon as I pay off my credit card debt, then I’ll start saving for a home,” or, “As soon as I pay off my student loan debt, then I’ll start saving for retirement.”
These folks don’t realize how costly the words “as soon as” can be. Paying off debt is a worthy goal, but it shouldn’t come at the expense of other goals, particularly saving for retirement. Company matches and tax breaks are not retroactive. And the sooner money is contributed, the longer it can benefit from compounded returns. Compounded returns are when your investment gains earn their own gains, which can dramatically increase your balances over time.
“By putting off saving for the future, you are really inhibiting yourself from benefiting from that wonderful magic,” says Kimberly Zimmerman Rand, an accredited financial counselor and principal at Dragonfly Financial Solutions in Boston. “If you can start saving today … you are going to have a lot more five years from now than if you decide to pay off debt for three years and start saving in year four.”
Why people tackle one goal at a time
The desire to laser-focus on one goal at a time is understandable, says financial coach Linda Matthew. People see faster results if they put every spare dollar toward paying down debt, for example.
But much of life requires multitasking, and money is no different, she says.
“I’ve got to take care of the kids, and stay in a relationship with my husband, and keep the house clean, and earn some money,” says Matthew, an accredited financial counselor and owner of Money Mindful, a financial coaching service based in Davis, California. “I can’t get into a relationship with my husband after I finish raising the kids; that’s called divorce.”
Busy lives make it tempting to try to focus on one goal at a time, Rand says. People may pay the most attention to their most immediate need or something that is causing them pain, ignoring the rest of their financial life.
“If you’ve got a bill collector calling, they’ve got your attention,” she says.
“As soon as” thinking can delay progress on any financial goal, Matthew adds. One woman told her the reason her family hadn’t saved was that they planned to start as soon as they had extra money, and they never did.
“You can’t wait for that,” Matthew says.
How to multitask
Financial experts recommend starting and maintaining a regular savings habit, even if it’s only $5 a week.
“I work with very low-income consumers, and I think most people can do this,” Rand says. “And then once your hours start to get more regular, maybe you’ve got a better job, now you can boost that amount.”
Rand also is a fan of making transfers automatic whenever possible.
“Setting it and forgetting it is actually a good thing when it comes to savings because then you don’t have to make that active decision every month,” she says.
O’Neill, who’s co-writing a research paper called “‘As Soon As’ Finances: A Study of Financial Decision-Making,” suggests dividing savings among different “buckets”: one for retirement, one for emergency funds, perhaps one for a home down payment. At the same time, target high-interest debt, such as credit card bills.
Once the system is in place, stick with it, O’Neill says. If a goal is achieved, or an expense such as an auto payment or child care ends, redirect that money to one of the other goals.
“You’re already used to paying that child care or whatever, and it’ll just fund everything a lot faster,” O’Neill says.
Inexpensive gift ideas for everyone on your list
Everyone knows that holiday shopping can be difficult. Whether you’re a part of a family that’s big, picky, or on a tight budget, getting the best gift can be trying. Here’s a quick list of inexpensive gifts to think about giving to a loved one this holiday season.
Sound. A set of Bluetooth earphones is always a good option. Bluetooth earphones can range from about $15 to over $200, so keep things cheap and search for the best deal with good quality. Any of your friends can use these, especially if they’re frequently on the go.
Scent. The classic candle is always a good choice, especially during the holidays when the seasonal scents range from a cozy gingerbread to a sweet candy cane smell.
Sips. If you know someone who must have a cup of hot tea every day, consider gifting a novelty tea infuser. The designs can be holiday themed, have meaningful quotes on the sides, or be a simple color. It’s a unique gift that won’t empty your wallet.
And where there is a tea drinker, there’s a coffee addict. For the coffee lover, a new mug is always a safe bet, and the creativity is endless. Buy a mug in a store, online, or even decorate a mug yourself! Simply buy a solid-colored coffee mug and use permanent markers to make a pattern and design it however you wish. If you mess up your design, put some rubbing alcohol on a cotton swab to erase. To ensure that the design doesn’t fade after washing, place your creation in the oven for 30 minutes at 350°F.
Even if coffee or tea are not your choice of beverage, a sturdy water bottle is another option. It’s easy to find inexpensive water bottles that will keep drinks cold for hours or even days! If you want to make it a more personal gift, go to a local store to get it engraved with their name or a cute phrase.
Succulents. If you’re loving the DIY activities, consider creating a trendy, DIY succulent display. The first step is to find a cute pot for the succulent or cactus. You can even create your own by following the same steps used to make handmade mug but choose a different container. Most craft stores sell small arrangements for your succulents. It’s fun to add plastic figurines like reindeer, decorative grass, rocks, and everything in between. It’s a chance to be creative and give a handmade gift.
Safety. If DIY isn’t your thing, give the gift of safety! Since many states are now hands-free, give a cell phone mount to a new driver or traveler for GPS purposes. They’ll really appreciate it, and it’ll keep them safe on the roads.
What are your favorite inexpensive gift ideas? Let us know in the comments!
Still Haven’t Booked Holiday Travel? 6 Ways to Save Now
We try to fit a lot into our holiday budgets, and travel can account for a pretty big slice of the pie. But even if you’re just beginning to think about the costs of visiting loved ones this holiday season, it’s not too late to save.
About half (49%) of American adults plan to spend money on flights and/or hotels this holiday season — that’s 123.5 million travelers, according to a new NerdWallet study.
And though 36% of these travelers say they’d skip buying gifts for friends and family if they were spending a lot to visit them this year, that level of sacrifice may not be entirely necessary.
If you’re scrambling for last-minute ways to save on holiday travel, here are some ideas to get you started:
1. Start watching rates, like, yesterday
Those who travel over the holidays book their flights 7.7 weeks before their departure date, on average, the NerdWallet survey found. You may be able to beat other travelers to the punch by buying before that peak booking time.
Also, set up alerts through popular booking sites like Kayak or Google Flights to keep an eye on rates. If they start creeping up as your travel dates near, you’re better off buying earlier than holding out for a last-minute deal and getting caught with astronomical fares.
2. Get serious about freeing up more money
More than 7 in 10 (71%) people who travel for the holidays start saving in advance, the NerdWallet study found. But even if your budget is tight and your travel dates are coming up soon, you can still look for easy ways to free up money.
Limit all optional expenses, such as meals out and entertainment, for several weeks. After all, holiday travel is one big optional expense; sacrificing drinks after work with friends for a few weeks could cover the price of your checked bag and a rideshare or two.
3. Make your credit card work for you
Three-fourths (75%) of holiday travelers will put some or all of their travel expenses on a credit card, according to the survey. Depending on their card and how long it takes to pay off those expenses, they could be earning as they spend — be it cash on a cash-back card or points toward future travel on a travel rewards card. Also, they could be using already-earned points and rewards to help pay for this year’s travel.
Use the card that stands to benefit you the most — one with decent rewards rates or other travel benefits like trip protection or no foreign transaction fees.
4. Don’t pay interest
Credit card interest can quickly negate any benefits from using a rewards card and can make your travel even more expensive. Still, 5% of people who put last year’s holiday travel on a credit card are still paying for it today, according to the survey.
If you know it’s going to take a few months to pay off your holiday travel, make a plan to minimize the impact of your credit card transactions. Opening a card with an interest-free introductory term is one option. But if time or your credit doesn’t allow for a new card, budget for higher-than-mandatory-minimum payments until you can pay it off.
5. Keep shopping after you book
After you’ve booked your flight, your deal-hunting doesn’t have to end. Most airlines will issue a full refund within 24 hours of purchase, even on nonrefundable tickets. The specifics vary by airline — so read up on your airline’s 24-hour cancellation policies — but you may be able to cancel and rebook if you find a lower rate within that first day.
A similar strategy can be used on hotels: If you make a cancellable reservation, keep checking rates. If they go down, you can cancel and rebook at the same hotel (or a different one, if the opportunity arises). Again, know the specifics of your reservation — if you try to cancel too close to arrival you could lose money.
6. Let your presence be their present
If travel is your top priority and you’ve done what you can but are still coming up short, don’t be afraid to skip traditional gift-giving. You wouldn’t be alone — 36% of travelers said they’d consider doing the same thing if they were spending a lot to visit friends and family. You’ve worked hard to get there; maybe they can come to you next holiday season.
A Crash Course in Finance for College Students
Whether you’re just starting college or about to finish up, it’s good to know how your finances work and how to make the most of your banking experience. With all of the options out there, it can be tough to decide which financial institution
to choose and which one will best fit your needs as a student. Here are some tips to help you thrive financially during college.
Many young adults will open an account at the same credit union or bank their parents use. But what happens when you move away from home? Be sure to check if there is a branch, credit union service center, or surcharge-free ATM close to both your hometown and school. There will be plenty of times when you need cash and want to be close to a location that won’t charge extra fees when withdrawing money or making a deposit.
Numerous websites compare brick-and-mortar credit unions and banks to online financial institutions. Research before opening an account with any establishment—there could be hidden fees or minimum balance requirements, and these minimums could be hard to meet as a college student. To get the best deals and best interest rates, consider opening a checking account in one place and a savings account in another. As long as you can keep up with your earnings
and pay your bills on time, separate accounts shouldn’t
be an issue.
Save Money Now
If you’re taking out student loans, don’t wait until you’re earning a real salary to pay them off. Open a savings account with high interest rates and no fees. There will be plenty of expenses throughout your college years, so there may not be a lot of money to save up. However, a little savings here and there will eventually add up and help pay off those pesky loans in the future. Or, better yet, start chipping away at your loans while in school—this can save you money in interest in the long run.
Get a Flexible Job
You may think there isn’t enough time in the day with classes, studying, activities, and sports, but there is always time to get a flexible job. Even if it doesn’t pay much, it’s better than having no income. Some schools offer student work programs or federal work study and have jobs that will work around your class schedule. Some schools will even give you free housing or cut down on housing costs if you become a resident assistant. If you feel comfortable sharing your car, you could become an Uber or Lyft driver and work for yourself whenever you have the time. There are also plenty of odd jobs worth considering. Ask your parents if they know anyone who needs house sitting, dog walking, or babysitting. These don’t take up much time and are relatively easy ways to make money without making a full-time commitment.
Create a Budget
Even if a job is out of reach, talk to your parents, guardians, or whoever is helping pay for school about setting a budget and sticking to it. College is about new experiences, so make sure to factor in a percentage for entertainment and spending money. Make a list of expenses like books, supplies, groceries, bills, etc., along with other things you may need money for, like events, shopping, and eating out. Although, if you do have a job, put a percentage of your paycheck aside into a savings account—you’ll thank yourself later.