It’s not surprising that at the beginning of each new year more people show up at the gym.
More people at work express their new goals and why this year will be different.
And, during this period it’s easy to stumble upon blog posts sharing the secrets to goal setting. Maybe you believe that New Year’s is the best time to set new financial goals, ones that you can finally achieve.
But, the truth is each year will be the same. If you haven’t changed any bad habits, you’ll most likely keep failing to achieve your goals.
“Insanity is doing the same thing over and over again and expecting different results.” –unknown
You don’t need to wait for the beginning of each year to make positive changes in your life. You can change a bad habit at any time of the year and still be successful.
The solution is simple…
Set great goals and break them down until they’re measurable.
The tactics I’ll cover aren’t complicated and they work. The only catch is that they’re challenging to adopt. But, if you master these 7 habits I’m confident your finances will improve. Here are 7 proven tactics to improve your finances today and not next year.
1. Never Stop Acquiring Knowledge
Commit to learning for the rest of your life.
Although colleges are expensive, a benefit is being forced to learn. Students read books, memorize formulas, and work with other students. While I’ve forgotten most of what I’ve learned, I do remember important principles.
The problem is not learning when you’re no longer required to. Books and online courses are now more accessible than ever before–allowing you to have limitless knowledge. Not taking advantage of this opportunity, if it’s available to you, doesn’t make sense.
If you want to improve your finances stop reading more finance books. Sounds contradicting right? But, if you’ve read one good finance book, you’ve read them all.
This isn’t to say that should never read more than one finance book or that they all cover the same exact material. But, reading 20 finance books on how to budget isn’t going to improve your finances.
Even if you do improve it’ll be a long and miserable process when you could’ve grown in other areas. Think of yourself as a character in a video game that gets XP on certain strengths. You can put all your XP in one single strength, but would it be a wise move?
Of course not, you’d be vulnerable in all your other areas. The same is in your life, you don’t want to only improve your finances. Instead, see yourself as a whole and aim to improve in many areas.
Other areas can improve include your health, mindset, relationships, and career. Read impactful books and take action each step of the way. Once you’re healthier and have a stronger mindset your finances will skyrocket.
2. Evaluate Where You Stand
Knowing your expenses isn’t enough.
You need to know your financial goals to improve your finances and if you’re on track to reach them.
Stop chasing other people’s dreams. It’s easy to want to pay off your entire credit card debt after reading someone else’s success story. But, it may serve you best to pay off your debt in a year instead–so that you can reach other goals.
As David Goggins would do, go to the mirror and see your reflection. Be honest with yourself and note which areas you suck at with your finances and where you’re doing good. Then, focus on improving one area at a time.
If you know that you can’t budget for your life, focus on this area. Spend time figuring out why you’re spending impulsively. And, which money story is holding you back.
3. Always Make Your Money Work Hard For You
If you’re still earning .01% in your savings account you’re missing out.
Nowadays most online banks offer an interest rate above 2%., and CDs closer to 3%. This is money that’s safe from the volatile market and will yield a far better return. But, rates change over time.
While today’s rates are high, they could be lower in the future. That’s why you always have to be in the lookout for how you could best make your money work for you.
By getting into the habit of reviewing your finances. Review your budget every month, and your savings each quarter. This way you’ll have a piece of mind that your money is always working its hardest for you.
Cutting expenses and saving money is only half the battle. You also need to invest your money for it to grow at a faster rate than inflation.
4. Don’t Rely On One Income
Start a side-hustle.
Don’t depend on one source of income. You never know when you might get laid off or have an unexpected emergency. By having a side-hustle you’ll have a plan b if your main income gets disrupted.
Plus, you’ll also be able to pay down debt faster and save more. So how do you go about starting a side-hustle? By choosing something you’re already good at or willing to learn.
Forget about finding your “passion” because that rarely works. Build your passion instead. Believing you have to discover your passion assumes you’ve lost it in the first place.
But, with so many options available it can still be overwhelming to start, even if you know your interests. Here are some of the best online side-hustles you can start today:
You can check out other great options here.
Stick with your side-hustle for at least 6 months to prove to yourself that it was or wasn’t for you. Many times people start a side-hustle and consider it a failure if they don’t earn money in the first few weeks.
The truth is that starting a side-hustle is like starting a business, it’ll take time to see success. But, once you do, you’ll have better control over your finances than most people do.
5. Remove Unused And Overpaid Expenses
Subscriptions and monthly bills kill how much money you’ll have leftover.
That’s because they’re recurring and easy to miss. Download your latest bank statement and review your monthly expenses. Remove ones that you don’t need and negotiate your remaining bills, starting from highest.
There’s no excuse for not negotiating your bills. Having no time or being a bad negotiator are challenges that can are easy to overcome. Use apps like Trim to help you save on cable, car insurance, and much more.
Review your expenses every few weeks to be sure that you’re not overpaying any of your expenses.
6. Create A Budget Around Your Values
Most people believe that a budget will deprive them of spending their money.
It can, but only if you have a generic one. A budget isn’t a one-size-fits-all solution. Instead, create a budget around your values.
Think about which items are important to you. For example, if eating out each weekend is important, budget enough money to do so. When you aren’t able to budget for something, look for areas you can cut costs on.
For some this may mean spending less money on clothes. To others, it may be spending less money going out. What’s important is that you create a budget that serves your values–you’ll stay committed and avoid burning out.
At the very least aim to save 10% of your income each month and pay down as much debt as possible. Paying more interest on your debt when you don’t have to is never a good idea.
7. Max Out Your Retirement Contribution
Start maxing out your retirement account.
It wasn’t that long ago when I’d contributed only 1% towards my 401K, and this was only because it was mandatory. What made me start contributing 15% was having a clear purpose.
Think of how you’d feel if you didn’t have to go to work to maintain your current lifestyle. I’m guessing you’d feel good–at the very least you’d be more at peace with your finances. I’ve asked many entrepreneurs what money meant to them, and most mentioned freedom.
Money can give you the freedom to travel more, spend more time with your family, and enjoy life on your own terms. Financial freedom is my goal, now discover yours. Set a goal big enough to motivate you to contribute as much as possible towards your retirement.
Even if you don’t max out your 401K, you’ll be better off than if you were contributing the least amount possible. Use Personal Captial’s Retirement Planner to find out how much money you’d need to retire.
Contributing 10% towards retirement for 40 years most likely won’t be enough for you to retire. This is assuming you want to retire at age 65. Any sooner is out of the question.
Find a motivating goal, set your ideal retirement date, and get to work.
8. Don’t Pay Your Debt Before Doing This (Bonus)
Sometimes it makes more sense to pay off debt at a steady pace versus as fast as possible.
Student loans are often a debt most people try to pay off immediately. But, depending on your goals it may be wiser to save this money instead or invest it. As long as your debt’s interest rates aren’t higher than 10%, you should check where your money is best put to use.
For example, if your student loan interest is at 5% and you’re planning on buying a house within 2 years–your money would be better spent saving for a house. If you’re someone who prefers a piece of mind then paying off your debt as soon as possible will be the best option.
What’s your situation like?
Jot down all your debts somewhere where you can refer to. Then list any big purchases or financial goals you’d like to reach in the next year or two. From here decide if you’re better off paying off your debt or saving money to improve your finances.
Reach Financial Happiness Implementing These Habits
“Success is not final; failure is not fatal: It is the courage to continue that counts.”–Winston S. Churchill
About 80% of people fail to reach their financial goals each year.
So what can make this year different for you? By changing your mindset. You can achieve great things year, whether you’re reading this on January 1st or November 28th.
All it takes is commitment and hard work. Find a reason big enough to keep you going regardless of your obstacle and you’ll succeed. Don’t let fear of failure stop you.
No one is prone to financial setbacks, even the finance gurus.
I’m still far from reaching my financial goals, but I’ve found a reason that has kept me going for these past few years. Now it’s time for you to get intentional. Find that burning desire to achieve something that’ll keep you going forever (or close.)
Financial independence is within your reach. But will you be willing to put in the work today and not wait till next year?