2017 is on the horizon, and with the new year comes New Year's Resolutions. It seems like most people say that in the new year, they want to lose weight or save money. And those are both great ideas, but without a plan, you just set yourself up for failure. So let's make that New Year's Financial Resolution and figure out how to increase our bottom line by the end of 2017.
Analyze Spending
Maybe the idea of trying to cut back is a bit too daunting. You feel like you're already doing everything you can. You can't imagine cutting back any more. Well, let's make sure that's true. Take a look at where your money is going. You can even pick one category. How much are you spending on dining out? Groceries? Food in general? Maybe you'd like to look at your entertainment expenses. If you have historical data in the form of a budget, that's awesome. You can start right now. If you don't, make January the month where you write everything down. Where is every dollar going? If you haven't been tracking this, you might be surprised where you spot some very easy places to cut back. Every so often, I step away from my budget and when I come back, I'm shocked to see how much I'm spending on discretionary items that I don't really need.
Look at Your Bills
What bills are you paying every month? Every year? Are you paying too much? A few years ago, I cut my cable tv subscription, because I realized I wasn't using it. I replaced it with an Amazon Prime account and a Hulu subscription (I already had Netflix). This is still much cheaper than what I paid for cable tv. If you're not ready to cut cable, consider cutting back on movie channels. Don't have any movie channels? Call the cable company and see if there are any promos going on. Even a $10 discount on your bill will save you $120 a year.
Make a Budget
I've talked quite a bit about budgeting. But no matter how much money you have to spend, you really should consider a budget. You might be surprised how easy it is to spend money when you start using a budget. And it doesn't have to be hard! You can simply use a spreadsheet in Microsoft Excel or Google Sheets, or you can use a program to help automate, like Quicken, YNAB, Mint, or many others.
Retirement Savings
Are you thinking about the future? Do you have a retirement account? If you don't have any retirement savings, look into opening a Roth IRA. If you have a 401k account through your employer? Are you contributing to the account? If your employer has any sort of a match, you should absolutely be contributing as much as you can to maximize that match. For example, if your employer matches up to a 5% contribution, you should be contributing the full 5% if you can. Why? It's free money! You essentially double your money just in the contribution. Yes, your investments could drop, but the odds of them dropping by 50% is pretty slim. So look at increasing this number.
Charitable Donation Deductions
If you itemize your tax returns, you can take a deduction for each charitable contribution that you make (provided that you have a receipt). This doesn't have to be money contributions. This also counts for items taken to Goodwill. I use Its Deductible to help me value and track the physical items that I donate to Goodwill throughout the year. Sure, it's not a huge deduction, but it does keep a bit of money in my pocket and it's a great way to do something good for someone else. Plus when I donate physical things, I'm also cleaning out my house, which is a great feeling.
Take on a Financial Challenge
If you missed it, last week I talked about challenging yourself to save a dollar a day. Sure, it's only $365 by the end of the year. But that $365 can be used for a lot of different things or it could even be invested for the future!