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  • Writer's pictureHushh Magazine

New Year New You!

“New year, new you.” That’s the mentality that leads many people to whip their budgets into shape every time the calendar flips to a new year, and that’s why we’re taking the time to offer up our best personal finance tips for the new year.


But let’s be clear: There’s no wrong time to whip your personal finances into shape.


We all have financial goals swimming around in our brain somewhere, even if we don’t actively think about them. But if you want to, say, retire in style, have a blowout wedding bash, or eventually own your own vacation home … well, whether you realize it or not, those can all be financial goals.


We say “can be” because they’re not actually goals until you start trying to achieve them—until then, they’re just daydreams.


So, how do you go from daydreaming about financial success to actually achieving it? A lot of ways, as it turns out. You can start big, you can start small, but most important is that you start.


Understand where you’re spending your money

First things first: You need to understand where all your money is going! Use the sunlight method. There’s an old adage that goes, ‘Sunlight is the best disinfectant.’ Originally, it meant that if you make the public aware of corruption, that corruption will get fixed, but it has expanded to mean that if you want to improve something, shine it in the bright light of day and take a good look at it.


Research shows that we tend to change our behavior simply by being aware that we’re being observed. That same principle applies to your money. Put your spending in the sunlight and observe yourself. Take a look at your bank statement and see what stands out. See where you can cut spending—perhaps that week of deliveries was not all that satisfying, or that new coat wasn’t worth the price tag. Prioritize your needs vs. wants—go over your list and challenge/think about every expense.


Compare your spending month-to-month, and try dedicating one day a month to go over your finances. Don’t even think about skipping it! Are you running out of money between paychecks? Did you forget about an extra expense? Do you have new priorities? Did you get a raise and want to spend wisely? If any of this sounds familiar, it may be time to rethink your budget!


Automate your personal finance efforts

Time to let someone else do the heavy lifting. Specifically, financial and investing apps that pack a number of tools into your computer, smartphone, or tablet. They make saving and budgeting seamless with gamified, automated tools that help you organize your money, so once you determine your financial goals, you can automate your efforts to reach it. This means you only need to have good behavior for a short period of time, and then after that, it’s on autopilot. You’ll be working towards your financial wellness goals, without even having to think twice about it!


Visualize your goals

Visualization is the practice of imagining what you want in the future and it is a powerful tactic when it comes to saving money. Think of a goal—what are you working toward? For some, it’s a smaller, short-term goal like buying an inexpensive laptop for college; for others, it’s a much larger, longer-term goal like achieving financial independence or purchasing a home (or eggs.... ifykyk).


Set short-term, mid-term, and long-term financial goals for yourself, and visualize how you will get there and the trade-offs you’ll need to make along the way. You can try many different options until you find a strategy that works for you, but having a concrete goal in mind will help incentivize you to work every day toward that goal.

Build your credit score

Your credit score is one of the most important pieces of financial data—it can determine whether you’ll be approved (and how much you’ll pay) for big-ticket purchases such as cars and houses. It’s also the basis for the most searched personal finance question: “What is a good credit score?”


Credit scores fall in a range of 300-850, and the higher the score, the better. So what’s ‘good’? Different lenders might view scores differently, but Experian says: ‘580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.’


If you have a low credit score, then, you’ll want to build good credit. You can do that by making timely payments on things such as utility bills, student loans, and car loans; opening a starter credit card and making on-time payments; maintaining a low credit utilization ratio (carrying balances that are much lower than your credit limit); and regularly keeping an eye on your credit report to make sure you’re not a victim of identity theft.


Start your retirement savings

One of the most popular goals, especially as people get older, is building a nest egg for retirement. Once you reach retirement age and stop drawing an income from your job, you still have to pay the bills from somewhere—and a large part of that “somewhere” is the retirement savings you build up in an investment account such as a workplace 401(k). Even if your employer doesn’t offer a 401(k), it’s easy to open up a brokerage account, or a tax-advantaged investment account such as an individual retirement account (IRA) or Roth IRA. And the sooner you start, the better off you will be come time to retire!


You don’t have to start big either—you can literally start with $10 here, or $20 there, and contribute more retirement funds, more regularly, over time as your (hopefully growing) salary allows.


And lastly: Don’t be embarrassed to ask for help. Some people can handle financial planning on their own. Some just need a little help, and many financial/investing apps can provide the educational resources and advice they need. But some might not have the time or the patience to run their own financial life, in which case, reach out to a financial advisor, such as a Certified Financial Planner.


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