2019 is already a quarter of the way over.
Can you believe that?
Despite the year being 25% over, it’s not too late to set some goals.
Make 2019 the year that you get all your ducks in a row.
Creating An Emergency Fund
You never know when disaster will strike. 2019 could be the year that something terrible happens to you or your loved ones.
Car crashes, hospital visits, home repairs, and unplanned travel expenses can all come when you least expect them to. If you aren’t adequately prepared, you could end up having to sell assets or put yourself in a mound of debt just to stay above water.
That’s where an emergency fund comes in. Establishing an emergency fund will give you peace of mind in case of tragedy.
Before you do anything else with your finances, start setting aside some of your paycheck for an emergency savings account.
Aim to set aside at least 3 months worth of expenses first. Go for more if you can afford it, but don’t get behind on other financial responsibilities in the course of saving up for emergencies.
Once your lifestyle becomes more complex and expensive, consider bolstering your emergency fund to anywhere from 6 months to a year of expenses. That way, should anything happen, you’ll have one less stressor on your mind.
Setting Up And Sticking To A Budget
Before you do anything more with your finances, you need to form a budgeting habit.
I’d recommend that you make a budget for the next month at the end of each preceding month. This does three things for you.
First, it helps to establish a habit. When you allocate some time for budgeting, it helps you integrate it into the rest of your routine. Sooner or later, it’ll feel just as natural to budget as it does to brush your teeth in the morning.
Making your budget at the end of the preceding month also gives you an idea of where all your money will be going before the month starts. Since some expenses occur on the first of every month (like rent or a mortgage), it helps to have a complete picture of your monthly financial situation before those expenses occur.
Lastly, budgeting is very enlightening. Almost every single person that starts a budgeting habit is taken aback by how much inane spending they’re doing.
The Parts Of Budgeting
There are a few parts to budgeting:
- Calculating your income
- Tracking your expenses
- Deciding on a budgeting model to follow
Calculating your income and choosing a budget model that suits you are both easier than tracking your expenses.
But the hardest part is sticking to your budget.
You’ll be tempted time and again to break away from your budget to buy the latest new gadget; but if you want to make 2019 a year of financial success, you’ll need to exercise some self-discipline.
When it comes to budgeting, consistency is key. Make it a habit to check your budget on a regular basis and set a day each month to figure your monthly budget.
Budgeting is foundational to accomplishing the rest of the goals on this list because it gives you a snapshot of your financial standing each month. Use your budget to see where you stand initially, then use each month’s budget to see how well you’re sticking to your plan. Review your income and expenses and see if you need to improve in any areas.
Eliminating Your Debt
Debt is so commonplace today that it can be difficult to find somebody who’s debt-free.
Some debt is good, but most of the debt you carry is “bad debt”: credit card debt, personal loans, and payday loans are all common examples of bad debt.
Being in debt means someone else is entitled to a portion of your money and/or assets.
In other words, the things you own aren’t 100% yours while you’re in debt.
Not to mention that holding large amounts of debt fattens the creditor’s pocket at the expense of yours in the form of interest!
Interest on debt does nothing to serve you; paying it gets you nothing (except for maybe staying out of court) and the worst part is that paying interest doesn’t even affect your debt balance.
In 2019, allocate some of your income to debt pay-off. The quicker you smash through your debt, the faster your money truly becomes your money.
Some tips to reduce and eliminate debt include:
- Live within your means
- Avoid credit card usage
- Allocate irregular income (like bonuses or birthday gifts) towards debt
Prioritize bad debt first. You gain absolutely nothing from bad debt, and you lose a lot of money to interest.
Once bad debt is gone, make an effort to never sink into bad debt again. The only time you should incur bad debt is in the extremely rare case that your significant emergency fund can’t cover sudden expenses.
After paying off your bad debt, tackle your good debt. Good debt might be useful, but it still implies that someone else is entitled to your money.
Cutting Your Junk Spending
After making your first budget, I’m sure you noticed you’re spending a lot of money that you shouldn’t be spending.
Maybe you’ve been visiting Starbucks for breakfast and Subway for lunch 5 days a week, and you’re stunned at the obscene amount of money spent at both stores.
Spending a couple hours a week preparing your own food will save you a fortune (and might be the healthier option too).
Another type of junk spending to watch out for is subscription-based services.
This could be anything from gym memberships to streaming services to magazine subscriptions.
I bet you forgot about all the automatic payments you’re making to these types of products and services.
Make time to cut those subscriptions you don’t need and you’ll end up with a ton of extra cash that you could put towards your debt or into your savings account.
Old habits die hard, as they say. Make sure that you don’t allow junk spending to creep back in. It’s easier than you think to slip up, since junk spending usually doesn’t happen in large amounts.
Cutting junk spending won’t take as much time as your other financial goals, and the effects will be much more immediate. Slashing this spending will also create a snowball effect since you’ll have extra money in your budget.
Get That Credit Score Up
The modern economy runs heavily on credit, aka debt.
For better or for worse, your credit score has a significant impact on your life. Logically, you’d want to maximize it so you gain access to the many benefits of a high credit score.
First of all, let’s talk loans.
Loans And Credit Score
Loans are used when someone doesn’t have the cash to buy something outright. Usually, this is a house or a car. Sometimes, it’s to start a business.
Since the lender is putting their money at risk, they need a system to rate people’s likeliness to pay back the loan in full and on time.
Thus, the credit score exists.
A high credit score makes it immensely easier to qualify for loans because a high credit score implies you’re good about paying what you owe.
In addition, maintaining a high credit score could save you thousands in interest on a loan. Many lenders will give you more favorable interest rates based on your creditworthiness.
But the perks of creditworthiness don’t stop there.
Other Perks
Believe it or not, some jobs require a credit check to qualify for hire.
This is more prevalent in finance and in government, but some other industries might run them as well.
So, you can qualify for better apartments with a higher credit score for the same reason that you can qualify for a loan: a strong credit history indicates that a prospective tenant is likely to pay their rent on time.
How To Raise Your Score
Paying off debt is a good start to raising your credit score, but that’s not the only thing you can do.
Here are some other ways to get your score up:
- Timely payments – If you can’t pay your bills on time, why would anyone believe you’re worthy of a loan? Make every single payment on time (easily done if you automate your payments, which we’ll talk about in a minute) and your credit score will slowly turn around.
- Increase credit age – The longer you hold onto a credit account, the more mature creditors believe you are. Try to keep as many credit accounts as you can open and in good standing for as long as possible.
- Keep credit card balances low – Going along with debt payoff, keeping your credit balances (aka your credit utilization ratio) low will prevent your credit from dropping.
- Watch for fraud – In an increasingly digital world, individuals of ill-intent have many avenues for stealing your credit card. All this does is run up your balance. Make sure to report any suspicious transactions, cancel the card, and order a new one.
Automate Your Investing
Investing is a great way to build your wealth.
Rather than keeping your money in the bank (where it fails to keep up with inflation), investing can help you build long term wealth.
How Investing Builds Wealth
There are two main ways that investing can make you money:
- Capital gains – Investment assets can increase in value. Holding onto a lot of assets over time allows you to cash out down the road for big profits. And even if you take a loss, you could potentially write it off as a capital loss on your tax return.
- Dividends – Some companies pay their shareholder dividends. You receive money directly from the company in proportion to how much of the company’s stock you own. Stuffing large amounts of money into dividend paying stocks over the years can add up to a sizable source of passive income.
Investing a little bit at a time adds up in the long run.
But consciously taking your money and putting it where you can’t touch it for a long time is tough to do.
Again, technology saves the day here.
There is an abundance of apps built to automate your investing based on various preferences and different mechanisms.
One of the most popular investing apps is Acorns.
Otherwise known as a “micro investing” app due to the small transaction sizes, Acorns takes any thought or worry out of investing for you by rounding up your transaction and investing your “spare change”.
Let’s say you spent $10.75 on a meal and you used a card linked to your Acorns account. Acorns will automatically take the “last” $0.25 and stick it into your portfolio.
You get to customize portfolio based on your risk tolerance as well. So if you’re younger, you can choose an aggressive, risky portfolio for maximum gains off of your spare change.
Other apps exist, but Acorns is by far one of the most intuitive AND one of the most automatic.
Automate Your Bills
Paying the bills is stressful, but it’s unavoidable.
To take the bills off your mind a bit, get all your bills set to automatically pay, if offered.
Bill pay automation’s main benefits are time saving and stress reduction.
You were going to pay the bills anyways, so why waste time logging in to 10 different online portals and trying to remember which credit card you use for which bill?
Also, since you don’t have to click the button and watch the money leave your account, it gives you a small boost to the psyche in the form of less stress.
Automating your bills is easy. Spend an hour (most likely less than that) and get all your bills on auto pay.
You’ll thank yourself later.
Increase Your Income
So you’ve finally sorted out all your finances.
- You’ve got peace of mind from your substantial emergency fund
- You’ve established a monthly budgeting habit (and you stick to your budgets)
- You’re debt free (or almost there, barring some “good” debt)
- Junk spending is almost or completely gone from your budget
- You’ve made some improvements to your credit score
- Your investing is mostly on autopilot
- Your bills are mostly on autopilot
There’s only one thing left to do… increase your income!
It’s time to make 2019 the year that you’re pulling in the kind of money you could previously only dream of.
Confused about how to do so?
Well, you could do a few things.
Ask For A Raise
If you’re a W2 employee, the easiest way to more money is asking for a raise.
Sure, it can be nerve-wracking. But if you’ve been a good employee who routinely goes the extra mile, a boost in your paycheck may be in order.
You’ll want to be prepared though.
First, write down your top 3 work accomplishments. Your boss won’t just give you the raise (well, unless they’re really cool). You’ll need evidence of your value to the company.
Next, read up on simple persuasion tactics. Make sure to avoid anything that sounds slimy.
If you don’t have time to read up on sales tactics, just follow this one rule:
Make the conversation about them.
People generally prefer hearing how something benefits them, not how it benefits you. Act accordingly here.
A boss’s opinion isn’t always that hard to influence; you just need to show your boss how you provide them (and therefore the company) value.
Pick Up A Second Job
Whatever you do, make sure your second job won’t add unhealthy stress to your life.
Your main vocation already causes you enough of that.
Instead, find a part-time gig in something that interests you.
Enjoy working out? Get a job at your local gym (hey, it might land you a free membership).
Or maybe you’re a voracious reader. Libraries and bookstores need people to sell (or check out) books.
Of course, check with both your company and the prospective second job to make sure you aren’t violating either party’s code of conduct by working for the other.
Freelance On The Side
Have an in-demand skill? Want some extra cash working from your laptop?
Try freelancing!
You can put as much or as little time as your schedule allows into your side gig, and the cash can add up once it gets going.
One skill that’s always in demand is writing. Lucky for you, we have a whole article on how to get paid to write. Read that article from top to bottom if you want to get started writing for pay.
Once again, verify with your employer that you’re not violating any company policies.
As an added bonus, however, some employers encourage their employees to have side hustles as these “extracurricular” gigs can teach you additional skills that could be applied in the workplace.
Start A Business
At the top of the “make extra income” pyramid is starting your own business.
Entrepreneurship is a risky endeavor, but the rewards are fantastic.
For one, you can make some serious money when your time isn’t tied to your income.
With business, your income isn’t tied directly to your hours.
Depending on the type of business you choose, you could automate most things after your enterprise has been running for a few years.
Someday, you could even quit your job to run your business full time!
Of course, businesses can fail.
And they fail quite a lot.
But with great risk comes great reward.
“Fortune favors the bold”, as they say.
Get In The Gym
What’s a health recommendation doing on here?
Yes, working out is important for good health… but that good health also brings about a myriad of benefits for your bank account.
Getting your sweat on regularly could do wonders for your wallet!
Hospital Costs
The modern sedentary lifestyle has been a bane on our bodies.
Years of sitting in a car, sitting at computers, sitting in a car again, and laying on the couch day in and day out can do a lot of rather expensive bodily damage.
Chronic lower back pain, joint aches, and general malaise have become widespread due to all the sitting and poor posture.
Expensive yet preventable injuries are much more likely to occur in this lifestyle due to muscular imbalances and improper posture.
Oh, and I haven’t even mentioned the prevalence of diseases like diabetes and heart disease that come from unhealthy diet.
Simply standing up and walking around (with proper posture, of course) more often could save you a lot of cash.
But getting in the gym and building some strength will bulletproof your body even more to both injury and disease.
Now, not all disease can be prevented through diet and exercise. There is such a thing as genetic predisposition to disease, and there is also such a thing as unexpected injuries.
But pumping some iron and hitting the treadmill can add years to your life and dollars to your bank account by lowering the chance of many of these “modern-day” injuries and diseases from happening, not to mention boosts your immune system and helps to ward off common colds and bugs.
Health Insurance
It’s in the interest of insurance providers to minimize their risk, and health insurance is no different.
Thus, many healthcare providers have discounts available for those who exercise a certain amount.
Breaking a sweat regularly could not only decrease your risk of multiple diseases, but it could even lower your insurance premiums. It might not be a lot, but any savings you can get on mandatory expenses is worthwhile.
Trim your waistline to fatten your wallet!
This Is Your Year
A lot can change in one year.
Think about it: you have 365 entire days each years to completely change your life.
Of course, 90ish of those days are gone already.
But that still leaves you a lot of time to get started!
Aim to accomplish all these goals in 2019. Take some time to find out where you stand and how you plan on achieving everything on this list.
Once there, put your nose to the grindstone and chip away at each one. Each day, little by little, you’ll pull yourself out of any financial holes you dug yourself and put yourself in a much better position to succeed.
Even if you don’t accomplish every goal on this list, you’ll be much better off than you were before putting in all that effort.