This post is from our regular contributor, Erin.
Happy New Year! I’m betting that after doing a year-end review of your finances, you have a few things you want to work on, and a few things you need to re-think.
Most people do. Lots of things can change over a year, and it’s worth taking advantage of the clean slate a new year offers to check in with the progress you’ve made on your larger goals.
It’s also a great time to look over your financial plan for any holes that may exist.
Even the best of us may forget a small detail here and there.
If you’re looking for financial moves to make this year, this post will give you a good starting point!
1) Get Crystal Clear on Your Goals
Setting goals goes hand in hand with evaluating your financial plan, and we have a list of 100 you can draw inspiration from here.
However, just because you declare you want to do something doesn’t mean you’ll follow through on it. Even worse, if you’ve set goals that aren’t meaningful to you, you’re at a greater risk of failure.
Getting absolutely clear on what you hope to work toward and accomplish this year will help all the other pieces of the puzzle fall into place (as you’ll see below).
Write your goals down, and ask yourself why they’re important to you. Prioritize them, and figure out what you need to do to see them through.
2) Simplify Your Accounts
As we grow older, our financial situations will likely become more complex. In a way, that’s good, as it (hopefully) means our net worth is going up. Unfortunately, that also means our finances can be more time consuming to manage.
Take a moment to evaluate all of your accounts. Make a list of the ones you can remember offhand, and then go through your bank statement to see if you forgot any. Consider getting rid of the ones you forgot (if you can).
There’s no reason to have five different savings accounts with five different institutions. Having too much to keep track of will lead to a loss of motivation, and it also means things are more likely to fall through the cracks.
Optimize the accounts you have, too. I switched from a brick and mortar bank to an online-only bank and am loving the slightly higher interest rates and convenience!
3) Work on a Debt Payoff Plan
Depending on the type of debt you have, it may be worth focusing all your attention and effort on getting rid of it. You can’t do that without a plan!
Gather information such as your principal balance, interest rate, and minimum payment, and make a list of your debt. It’s time to face the numbers.
You can use the debt snowball or debt avalanche method to pay it off. Either way, if getting out of debt is your #1 goal, you should make extra payments when you can.
4) Create a Budget
You probably knew this would be on here, didn’t you? Even though I’m not sold on the fact everyone should keep a super strict budget, if you’re new to managing your finances, you should give it a try.
There are many different ways you can do it. Having your budget automated with a system like Personal Capital can help, some prefer the envelope cash system, and other people prefer keeping a detailed spreadsheet in Excel.
There’s no “perfect” solution you should aim for. Just focus on what works for you! Budgeting isn’t about deprivation, it’s about adjusting your financial habits to have the biggest impact.
5) Ask for a Raise
This one is a no-brainer. At some point this year, it will likely be appropriate for you to approach management about a raise. If you’re a freelancer, the start of the year is a great “excuse” to tell clients you’ve evaluated how you performed last year and are increasing your rates.
Asking for a raise is one of the simplest ways to increase your income. You don’t want to get left behind when it comes to salary, otherwise you might stay behind.
If you can’t secure a raise (perhaps it’s not in the budget), then consider looking for another job (if you have enough reasons to!) or taking on a side hustle or part-time job.
6) Start Investing
You shouldn’t just be seeking to increase your income. You should also be thinking about long-term growth, which is where investing comes into play.
If your employer offers a match on your 401(k), contribute what you need to get it! Don’t have access to a 401(k)? Then open an IRA. Take a step in the right direction in saving for retirement.
Remember, time is on your side. Every month you delay is another month you don’t benefit from compound interest.
7) Declutter and Sell Your Stuff
Decluttering might not sound like a financial move on its own, but there are many hidden benefits to it. The most obvious is that you can sell whatever you don’t keep and profit from it. The other? Freeing up more space in your home or apartment.
Maybe you’ve been thinking you need to move to a bigger place. Decluttering can show you that your current space is more than enough. That means you’ve saved on moving costs (and possible storage costs), which is a huge financial win!
8) Donate to Charity
This is one area I’ve been trying to make progress in. You don’t even have to donate a lot; small donations from thousands of people add up. Don’t let that hold you back.
Pick a charitable cause that’s meaningful to you and work out a plan on how much you can donate per year. Don’t forget to save your receipts come tax time!
9) Buy High Quality Items
I’ve written about this before, but the simple fact is you get what you pay for more often than not.
In the past, I couldn’t stand spending so much money on something that was higher quality. The price tag always deterred me.
I tend to go the other way these days. I’d much rather have to go through the buying process once and save myself the stress!
10) Track Your Spending
This goes along with budgeting, and I’ve also covered this before, but the top financial move I tell most people to make is track their spending. It’s so simple, especially if you use a credit or debit card, and you could be in for a big reality check.
It’s worth knowing where your money is going, otherwise you can’t make the necessary changes to correct your bad habits.
11) Spend on Your Values and Forget the Rest
Besides getting clear on your goals, you should get clear on your values as well. What makes you happy? What have you purchased with no lasting regrets? What never goes to waste if you buy it? Focus on those things and cut out the rest.
That last part is important. You have to be willing to focus your spending on your values, but not spending anywhere else will result in savings.
12) Get on the Same Financial Page as Your Spouse
Are you married, engaged, or sharing finances with your significant other? Then one of the best things you can do for your money this year is to get on the same page as them ASAP.
There’s nothing that will ruin your financial situation or goals quicker than a spouse who isn’t in the loop. Use the new year as a reason to start meeting with each other once a month (or more) to review your budget and progress toward your goals.
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Thinking about the financial moves you can make this year will give you a better idea of what to aim for, and can give you greater awareness of how to make your money work harder for you.
What financial moves are you focusing on this year? What are some moves you think people should make, but are often forgotten?
Financegirl says
LOTS of good advice here, Erin! Personally, I like getting on a written budget for anyone who has debt (especially student loan debt). This year, I’m hoping to repay a lot of debt from law school!
Petrish @ Debt Free Martini says
I’m big on number three for many people failed to create a plan!
FrugalRules says
Great list of tips Erin! We’re working on #7 big time this year. We’re hoping to move sometime this year and really don’t plan on paying to move stuff we simply don’t use so we’re doing a big purging of all that to either sell or donate.
DebtDiscipline says
Great tips! #7 has been on going in our house for awhile now. We are making progress. Just about to donate three bags of clothes this week.
Eyesonthedollar says
I’m working on getting rid of stuff we don’t need or use. I have no idea where it all comes from, but it’s amazing how much we seem to accumulate in a year.
stefanieoconnel says
Focusing on income gains again in 2016. Really want to get to a point where I feel I’m funding all my goals all the time.
Erin @ Journey to Saving says
Financegirl Thanks, Natalie. Budgets are definitely a great idea for those who have debt and are looking for ways to put more money toward it!
Erin @ Journey to Saving says
Petrish @ Debt Free Martini You’re too right about that, Petrish. I’m a big believer that you can’t succeed without some sort of plan!
Erin @ Journey to Saving says
FrugalRules Thanks, John. Same here! I’m actually kind of looking forward to it and starting clean in the next place. =)
Erin @ Journey to Saving says
DebtDiscipline Nice! We donated two huge bags the other week and it feels so nice to have more space in the closet and less overwhelm when looking at how many clothes there are. (Silly problems, I know.)
Erin @ Journey to Saving says
Eyesonthedollar I know! Even though I decluttered a couple of months ago, I look around and see so much that we can still get rid of. It’s like an ongoing challenge!
Erin @ Journey to Saving says
stefanieoconnel I hear you on that, Stefanie. That’s why I’m excited to pay off my student loans – so I can put all of my money toward other things and NOT interest!
ferventfinance says
Great list! I definitely plan on increasing my income, asking for a remote work arrangement, and giving away a lot of my stuff (crap).
Erin @ Journey to Saving says
ferventfinance Awesome! Good luck on the remote work arrangement. That’s definitely something worth trying to negotiate for.
blonde_finance says
Happy 2016!! This is a great list Erin!! For me, I am working on growing my wealth this year by building my business even more and then selling it. I think the best way to get successful in the new year, though, is to pick just a few areas to work on and then focus on them. I feel like I am always more successful when I have one or two big goals rather than a number of little goals.
Erin @ Journey to Saving says
blonde_finance Happy 2016! Same here! I work MUCH better when I have less to focus on. It’s better to narrow your goals down to make a bigger impact in those few areas.
mycareercrusade says
Heya Erin, welcome to 2016! How’s it treating you to date :)?
Awesome list that’s pretty comprehensive there, I particularly like the charity aspect of it..
My focus is going to be looking to create passive income and as many different income streams as I can..
To me having a dependency on one isn’t ideal however it’s not always easy I know
Cheers :)
Erin @ Journey to Saving says
mycareercrusade Thanks! It’s not too bad, I hope you’ve been enjoying it. =) I completely agree with you. Ever since freelancing, I’ve learned to really enjoy having so many different income streams. I don’t think I could go back to having just one!
SimplySave says
I’ve been decluttering like crazy lately and last week I had a lot of luck selling stuff! $300 extra towards crushing my mortgage!
Erin @ Journey to Saving says
SimplySave That’s awesome! Way to declutter and profit. =)