3 Money Tips for the New Year

It's a new year and time for a renewed commitment to financial fitness. Setting financial goals can be intimidating. I love setting them and I know how important it is, but at times, I find myself asking "How" questions. Like, "Ok, great goal, now how in the world am I going to do this?" However, it's far more powerful and motivating to ask "Why" questions. As in, "Why do I want to do this?" 

"How" is a question that's bound to bring up negative feelings. Instead of getting you excited, it can leave you deflated. On the other hand, knowing your "Why" is what's going to help you figure out how. Your "Why" will also keep you energized when you encounter setbacks. There's nothing magical about it.  It's a matter of perspective. Knowing why you want to do something shifts your perspective from negative to positive. Instead of getting that sinking feeling in your stomach because you're asking, "How am I ever going to be able to do this?" you'll be buoyed up by knowing, "I have to do this because...". And the more compelling the reason, the harder you will fight to acheive your goal. So, as author Simon Sinek put it best, Start With Why.

Here are 3 money tips to kickstart your year:

1. Put Your Financial Goals in Writing
Once I come up with the amount I want to invest in various accounts (i.e. retirement accounts, annuities, real estate, etc.), one of my favorite things to do is to write my total investment goal for the year on a sticky note and put it on my bathroom mirror. This forces me to stay focused. Each time I move money to an investment, I subtract it from my total goal. I used to do this with sales goals, and I find it works just as well for financial goals. It keeps me motivated to reach certain benchmarks that I mentally set for myself. For example, reaching $X by the end of the month or quarter.

You can use this same method for paying off a credit card or building up an emergency fund. 

​2. Set Up Automatic Investments
Just about every bank or financial institution can help you set up an automatic investment account. Simply put, if you want to max out your Roth IRA at $5500 this year (2017), you can set up your account to transfer $458.33 per month (X 12 months = $5500) to your IRA account. For those 50 or older you can max out at $6500 (or $541.67 per month). You can also set a reminder on your phone a couple of days in advance to help you remember when the transfer is about to take place. You don't have to max it out, so if you can only do $100 or $200 per month, do it. Your 70-year-old self will thank you. 

Another way to set up auto investing is to select a percentage of your pay each week to transfer to a savings account that you plan to use for investments. The wealthiest savers in the world save 40% of their paychecks, however most experts will recommend at least 10-15%. Heck, you could start at 3% for now. Make it your goal to increase that by 1-2% every 4 months until you feel comfortable investing 10% of each paycheck. Or, if you feel more comfortable transferring the money manually, set a reminder on your phone that goes off every Saturday morning with your target % and make the transfer.

​3. Find Money to Invest
It's safe to say, this is important. Your future, your retirement, and the lifestyle you dream about...it all comes down to your habits now.  ​Whether you are on top of your game or you feel strapped for cash, there are some things you can do to invest more this year. Here are a few suggestions to find money.

• Create a budget. You would be surprised at how much money gets wasted when there is no budget. The simple exercise of writing every expense on paper can help you curtail the urge to spend on things like daily Starbucks runs, clothes you don't really need, or eating out (I am sooo guilty of that one). You can find money by packing a lunch every day or making coffee at work. And while it's certainly ok to buy clothes, set a budget for the month and stick to it. A great way to see how much you may have wasted last month is to add up all your receipts for the past 30 days. $5 per day at 10% annual rate of return turns into over $330,000 in 30 years. Even at half that amount, that's a pretty expensive daily run for coffee. 
• Renegotiate your monthly expenses. Call your cell phone provider, the cable company, your insurance company, etc., and ask what you can due to reduce your monthly bill. You'd be surprised. It might be $10 per month or 3, 4, 5 times that. 
• Pay on time. Late fees can really eat away at your financial goals. If you do pay late, call and ask for forgiveness on the late fee. Many times they will give you at least one free pass. 
• Sell something. That iPad that you never use, that bike you never ride...the boat or ATV???  Could that money be better used paying down debt or starting your emergency fund? 
• Go to MissingMoney.com and check the state you currently live in as well as any you lived in in the past. I found out I had unclaimed money in both PA and CT from old accounts I had closed. Free money is my favorite kind. 
• Extra hours, extra job, or if you are paid commissions, extra energy towards your goals. Revisit your "Why". If that doesn't do it, you need a better "Why".