Each new year offers a new opportunity to shed bad money habits and create awesome new ones. We asked eight financial planners to give us their best advice for making 2018 the year we actually stick to them.
1. Do a year-end review.
Before you look forward, look back at what you got right in 2017 and where you could make some progress. Certified Financial Planner Stacy Francis, head of Francis Financial, recommends assessing which financial goals you did (or didn’t) hit in 2017, how your investments performed and how much debt you have (and haven't) paid off.
Celebrate your wins (yay, you!). Then make a concrete plan to improve the areas where you fell short.
2. Focus on what you can control.
There’s a lot we can’t control when it comes to money—from rising interest rates to new tax laws and stock market fluctuations. While it’s important to understand what’s going on, don’t obsess over things you can’t do anything about, says financial advisor Russ Thornton, who runs Wealthcare for Women. Instead, turn your attention to things you can control—like creating a budget that works, getting your company’s 401(k) match and paying down debt quickly.
3. Cut back on dining out and shopping in Q1.
The first three months of the year are typically pretty quiet, as we recover from holiday temptations and busyness—making it the perfect time to pare back your spending.
“The easiest way to achieve this is cutting back on eating out and shopping," says Certified Financial Planner Ryan Glover of Tarheel Advisors. “By starting the year with a hard reset, you can feel much better about your money as your spending obligations increase throughout the year.”
4. Schedule "no spend" weekends.
If a three-month spending cleanse feels too extreme, try a “no-spend” weekend. "All too often, we spend the weekends spending,” says Certified Financial Planner Desmond Henry, founder of Afflora Financial Life Planning. "Instead, look for free events and outings in your neighborhood—or double up and make your ‘no-spend weekend’ a ‘to-do list weekend,’ where you finish all those chores you've been putting off."
5. Account for holiday overspending now.
Nursing a holiday debt hangover? Make sure you avoid the same fate in 2019. "Open up a savings account specifically for holiday shopping and contribute throughout the year, so you have a budget and don’t go into more credit card debt," Francis advises.
6. Check your net worth.
We all know our bank account balances. (Right?) But do you know how much you’re worth overall? "A net worth statement will give a clear picture of whether you're on track financially," says Certified Financial Planner Jeff Rose, who runs Good Financial Cents. "Make a goal to achieve $100,000 in net worth. When you focus on achieving this, it really puts into perspective how much debt (or liabilities) you have, like mortgage, car notes, student loans or credit cards, and encourages you to focus on growing your assets."
7. Deploy a gradual saving strategy.
If you’ve never saved regularly, it can be overwhelming to go from saving $0 to a hefty amount, which is why Certified Financial Planner Pamela Capalad of Brunch and Budget recommends a more gradual buildup for long-term success. "If your goal is to save $500 a month, save $100 the first month, then $150 the second, $200 the third and so on until you’re saving your target amount,” she says.
8. Increase your 401(k) by 1 percent.
Even if you're already taking full advantage of your employer match, take it up another notch. "An extra 1 percent won’t feel like a lot now, but over time, the increased savings could equal [thousands more] in your account when you retire,” says Certified Financial Planner Benjamin M. Westerman of HM Capital Management.
Don’t have access to a 401(k)? Stash cash away in an Individual Retirement Account (IRA).
9. Don't get sucked into investment FOMO.
Keep it simple when it comes to investing for the future, advises Certified Financial Planner Julie Ford of Ford Financial Solutions. "Don't get caught up in the hottest investing trends—emotions start taking over and you’ll be more prone to making a rash decision," she says. Stick with well-diversified, low-cost investments and an overall strategy that’ll help you accomplish your long-term goals—then let it do its work.
December 26, 2017