All it takes is a little effort and a lot of patience to become confident in your financial decisions.
5 Minute ReadTopic: retirement
Do you ever feel like you’re in a chronic cash crunch? That can be a real damper on your days and take the hope and expectation out of a new year.
But if money tops your list of New Year’s resolutions, you’re in luck! Research shows you’re on the road to success. According to Fidelity Investments, 56% of people who resolved to improve their finances last year did just that. Better yet, 83% said last year’s financial resolution is an ongoing event instead of a one-time goal.
Who knew change could be so exciting?
Put those resolutions into action—and get a leg up on your happy New Year—with these five money hacks.
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1. Use Cold, Hard Cash
Lots of folks choose plastic over cash for everyday purchases, and research shows that can lead you to spend more. Why? According to a Journal of Experimental Psychology study, parting with cash really is sweet sorrow. Plastic simply doesn’t tug at your emotional strings in quite the same way.
So this year, put a little more pain back into your purchases. Use envelopes to divvy your dollars up across everyday budget categories. You might have one for groceries, restaurants, entertainment, clothing, and pocket money.
On payday, fill your envelopes with the cash you budgeted for each category. When an envelope’s empty, the spending stops for that category until your next paycheck. It’s that simple!
2. Give Impulse Buys a 30-Day Notice
You went to the store for one thing and ended up with a cartful you never intended to buy. Once the thrill of the bargain hunt wore off, regret set in.
Sound familiar? If so, join the crowd. A recent study found that five in six Americans are impulse shoppers.
We all know it pays to sleep on a big money decision overnight. But what about smaller purchases that crop up throughout the month? Why not add them to your wish list and wait 30 days? That gives you a chance to work them into next month’s budget. And who knows? That can’t-live-without item you had your eye on just might be on sale by then!
3. Ignore Interest Rates When Paying Down Debt
Want to put a big dent into your debt this year? You might be tempted to grab debt by the jugular and attack the biggest interest rate first. But it takes more than math to win. According to Fidelity, the number one reason people stick to a money resolution is because they’re encouraged by their own progress.
That’s where the debt snowball comes in. Here’s how it works: List your debts in order by outstanding balance, and attack the smallest one first. Once you knock it out, roll that cash over to your next debt, working your way up to the biggest of the bunch. You’ll build momentum—and motivation—as you watch your debts go down and your cash flow go up!
4. Go Roth With Your 401(k)
These days, most full-time workers have access to a 401(k) through their employer. This is a great way to save for retirement because it enables you to make pre-tax contributions for your future.
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What you may not know is many employers offer a Roth 401(k) option too. According to a Willis Towers Watson study, 54% of large and midsize companies do, yet only 10% of employees take advantage of it. That means lots of folks are missing out on tax-free growth.
Does it really make a difference? Let’s compare. The same amount of money went into two 401(k) accounts—one traditional and one Roth—and both grew at the same rate. The Roth takes the cake at retirement.
And beginning last year, any pretax match dollars your employer puts in can be converted to a Roth. That’s means even more opportunity for tax-free growth! Just keep in mind that you do have to pay taxes on any money you convert. An investing professional can show you how it works so you can weigh your options and choose the strategy that’s right for you.
5. Take Advantage of Free Financial Education
It’s no secret that money can cause big-time stress. According to the American Psychological Association, 72% of adults worry about money at least some of the time, and 32% say money woes stand between them and a healthy lifestyle.
This stress can distract you on the job too. It’s hard to get work done when you’re preoccupied with money problems. No wonder almost 90% of employers surveyed by Aon Hewitt had their sights on a financial wellness program last year.
If your company offers this benefit, don’t miss out! It’s a great way to learn how to manage your money and plan for the future. That’s something everyone can feel good about!
You Can Do It!
The confetti may have settled, but the New Year’s fun has just begun. It’s time to rock your resolutions and show your money who’s boss!
Who knows? You just might discover a fresh new burst of confidence that inspires you to set—and conquer—even bigger goals next year.
Better yet, team up with an investing professional in your area who can help build your long-term investing strategy. SmartVestor Pros help empower you to make educated decisions about your investments. Learn more about SmartVestor Pros near you today!