The start of a new year is a great time to re-evaluate your current financial situation and begin to implement some changes that will have a big impact on your overall financial picture.
Some people love New Year’s Resolutions, and others hate them. Regardless of whether or not you create resolutions, there are a lot of different ways that you can go about improving your own finances in the coming year.
In this article, you’ll find 15 practical and actionable ways that you can improve your finances in 2019.
1. Set Financial Goals
One of the most important things you can do is set some financial goals. Your goals are determined by whatever is important to you, and they help to give you direction and purpose.
My suggestion is to create a goal (or a couple of goals) for 2019, and then also create a few long-term goals as well.
Your goals should be specific and measurable, and should also have an end date or deadline.
For example, a good goal would be to add $2,000 to a savings account by the end of 2019. And an example of a bad goal could be something vague like “reducing debt” (it’s not measurable and has no deadline).
Your financial goals could involve things like:
- Paying down debt
- Saving and investing
- Creating an emergency fund
- Making money
- Net worth achievements
2. Create a Budget
The budget is an important part of any financial plan. If you don’t already have a budget, now is a great time to create one.
Having an established personal or family budget is one of the best ways to get the most out of your money and cut down on waste.
Creating a budget may sound intimidating if you have never done it before, but it’s really not hard. I have an article, How to Create a Budget That Works, that shows exactly what you need to do.
Or, you can enter your email address below to get a free budget template that makes the process much easier and faster.
3. Identify Your Priorities
Budgeting tends to be a topic that evokes negative feelings. Most people associate a budget with limiting the ways that they can spend money.
In reality, a budget actually gives you control over how you spend your money, and it allows you to determine your own priorities.
While it is important to live within your means, you don’t need to be stingy and cut back in every single aspect of your life.
Creating a budget will help you to determine which expenses are the most important to you and your family (if you have a family). You can allocate your money according to your own priorities.
You don’t have to cut back in every area. The key is to know your priorities and save in the areas that don’t matter as much to you.
Personally, clothes don’t really matter to me. I spend as little money as possible on clothes, and my wife is the same. We also eat almost all of our meals at home and eat maybe one meal a week from a restaurant. Cutting back in those areas that don’t really matter to us allows us to spend more money on other things that do matter.
4. Track Your Expenses
While creating a budget is important, tracking your expenses is equally important. The budget doesn’t do you any good if you don’t know how your money is actually being spent.
You’ll need to decide on a system for tracking and recording your expenses. You can either use a simple approach like a spreadsheet, or use an app like Personal Capital.
If you’re manually entering expenses into a spreadsheet, my recommendation is to record expenses each day so you don’t miss anything.
5. Track Your Net Worth
Net worth gives a big picture look at your overall financial situation. It’s much more indicative of wealth than how much you make. You can make a lot of money, spend it all, and have nothing to show for it.
→Related reading: 9 Convincing Reasons Why You Should Be Tracking Your Net Worth
If you want to build wealth, you should be paying attention to your net worth. Unfortunately, most people don’t know their net worth.
About a year ago I started tracking my net worth, and I wish I would have started earlier. My financial goals involve net worth, so it only makes sense that I track it on a regular basis.
Seeing my net worth has been a great motivator, and has caused me to think about how each financial decision will impact my net worth.
I use the free app Personal Capital to track net worth, and I highly recommend it. In just a few minutes you can create an account and link all of your financial accounts. From the Personal Capital dashboard, you’ll be able to see and track your net worth. You’ll also have access to a lot of handy reports.
Right now Personal Capital is offering a free $20 Amazon gift card for new users. All you need to do is sign up here and then link it to at least one of your financial accounts. After you link an account you’ll get an email with the $20 gift card.
6. Pay Down Debt
If you have high-interest debt like credit cards or personal loans, paying off that debt as soon as possible should be a priority. Student loans, car loans, and medical bills can also be attacked.
Mortgages are typically at a lower interest rate and not considered bad debt, but it’s up to you if you want to pay off your mortgage early. There are definitely some benefits, even though the interest rate may not be killing you.
There are a few different approaches you can take if you’re going to aggressively pay down your debt. The most common strategies are the debt snowball and the debt avalanche. This article from Student Loan Hero compares the two.
7. Maximize Your Credit Card Rewards
Credit cards can definitely do a lot of damage to your finances if you’re not careful. However, if you manage a credit card well, you can get a lot of free rewards.
I’ve been using a credit card since I was 18 (I’m 40 now) and I use them for almost every expense. I put as many of my purchases and bills as possible on a credit card because of the rewards and cash back that I earn.
If you pay your credit card balance in full each month, there is a lot of upside to rewards cards. I earn anywhere from 2% – 10% cash back on purchases that I would be making anyway, just by using the right credit card.
For starters, I recommend getting a good “every day” cash back or rewards card that you can use for all of your purchases. For me, this is the Citi Double Cash card that pays 2% cash back for all purchases.
If you want to take it a step further, you can get other credit cards that earn higher amounts of cash back for specific purchases. For example, the Discover It card and the Chase Freedom card pay 5% on purchases in specific categories that rotate each quarter.
That’s just a quick summary, but if you are interested in cash back and rewards I have two articles that you’ll want to check out:
8. Automate Your Savings
Let’s face it. Most of us aren’t as disciplined with saving as we should be. We may have good intentions, but it’s easy to get distracted by life and forget to set money aside.
The best way to overcome this is to automate your savings, and there are a few different ways you can go about it.
If you have a 401(k) plan through your employer you can set up a certain percentage of your pay to be automatically contributed. This money will go into your 401(k) each pay period before you even see the money.
If you have a 401(k) plan available to you, you should definitely take advantage of it. Your contributions will reduce your taxable income, and most employers will match at least a small percentage.
Blooom is offering a free 401(k) analysis. All you need to do is log in to your 401(k) plan and within a few minutes you’ll have a lot of valuable insight. I did this with my own 401(k) and found it to be really valuable information. Get your own free analysis here.
Aside from 401(k) contributions, you can also set up automated savings in other ways. One of the easiest and most practical ways is to set up an automated transfer from a checking account to a savings account each month. Almost every bank makes this very easy to set up through your online banking account.
Setting up an automated transfer assures that you’ll save money, and you don’t even need to do anything.
Great High-Yield Savings Accounts:
If you’re looking for a good savings account, I use and recommend CIT. They have excellent rates for both savings accounts and money market accounts. Their interest rate is more than 20x the national average!
9. Reduce Your Recurring Bills
If you want to have a big impact on your finances in 2019 one of the things you should focus on is reducing your monthly recurring bills. Even small savings here will really add up over the course of the year.
There are a few ongoing bills that are great options for reductions:
- Cell phone bills
- Cable bills
- Insurance premiums
- Gym memberships
A few years ago, my wife and I switched from a plan with a major cell phone carrier to a discount pre-paid carrier. That simple change literally cut our monthly cell phone bill in half, and it had no negative impact on our lives. We’re now with Cricket Wireless and our coverage is just as good, if not better than what we had before.
If you sign up for Cricket Wireless through my referral link you can get a $25 account credit. Another great option is FreedomPop.
Another big change that we made in our house was getting rid of cable. We cut the cord about 5 years ago and have been saving money ever since. We use Netflix for the majority of the TV shows and movies that we watch, and during football season I also get a Sling membership for $25 per month so I can get the ESPN channels.
→ Related reading: 10 of the Best Cable Alternatives for Saving Big Money
Let Trim Negotiate Lower Rates for You:
One of the best resources to help with reducing your recurring bills is Trim. You can create a free account with Trim and it will evaluate your recurring expenses and try to find subscriptions that you don’t need and can cancel. Even better, Trim will work with your cable or internet provider and negotiate your bill for you! You have nothing to lose and you can try it here.
10. Start a Side Hustle
Sometimes the best thing you can do for your finances is to make a little extra money. A side hustle can be anything that brings in money outside of your job.
There are endless options, and if you’re looking for some ideas I have a huge list of more than 150 side hustles that should provide you with plenty of inspiration.
Here at Vital Dollar, you’ll also find detailed guides that can help you to get started with some of the best and most popular side hustles, like:
- How to Start a Blog
- Complete Guide to Building a Profitable Niche Website
- How to Sell Private Label Products on Amazon
- Flipping Furniture for Profit
- How to Become a Transcriptionist
Personally, I’m a big fan of side hustles. My business originally started as a side hustle way back in 2007 (I’ve been at it full-time since 2008).
Even making just a couple hundred dollars per month from a side hustle can have a huge impact on your finances. That money can be used to pay down debt or invest for the future.
11. Create Passive Income Streams
If you’re like me and you hope to retire early, creating passive income streams is something that you should focus on.
Passive income doesn’t take much of your effort to create, and it can serve as a replacement for your job when the income gets high enough.
There are a number of excellent possibilities for creating passive income. I won’t go into the details here, but you can see my article on passive income ideas for plenty of possibilities.
12. Learn to Wait on Purchases
If I had to pick a single financial habit that has saved me the most money over the years, I would say it has been waiting on purchases.
Make an effort to wait at least a day or two on any purchase that is not a necessity. When I wait, I often ultimately decide I don’t need the thing I was considering purchasing.
Impulse spending is a bad habit that can eat away at your finances. You can avoid a lot of buyer’s remorse and bad expenses by simply waiting. Make an effort this year to get in the habit of waiting.
13. Take Advantage of Free Money
What’s better than free money?
It may sound too good to be true, but there are actually several ways you can get free, easy money. In 2018, I made an effort to find and take advantage of these offers, and I’ve compiled some of the best ones on my Free Money page. Just head there and you’ll find some great options.
Just to highlight a couple of my favorites:
- SaverLife is run by a non-profit organization, and they will actually pay you to save your own money! You can get $10 per month (for the next 6 months) if you save $20 of your own. Just link it to your savings account and set up a monthly automated transfer. I got the $60 a few months ago.
- MissingMoney.com is an awesome website that helps you to find money that is rightfully yours. Just enter your name and state (or state where you previously lived) and it will search for your missing money. I got more than $100 from 5 minutes or less using the site.
Most Americans, myself included, have too much stuff. Our houses, garages, and sheds are full of a lot of things that we don’t use or need.
In 2019, you can make an effort to declutter and get rid of the things that you don’t need. You can sell things of value, donate it, or throw it in the trash.
Decluttering can help you to get into the mentality of cutting back and saving money. On top of that, you can make some decent money from selling your things.
My wife and I had a yard sale last year (it was pretty much all her effort, I can’t take credit for it). Getting rid of stuff felt great, and we made more than $400 from those things that we weren’t using. I’m looking forward to a yard sale again this year, and I plan to put in a lot more effort myself.
15. Commit to One Lifestyle Change
There are a lot of different ways that we can impact our finances by making simple lifestyle changes. These are usually things that we do repeatedly that cost us money, and may not really be necessary.
Here are a few examples of lifestyle changes you could make this year:
- Pack your lunch
- Eat more meals at home and fewer at restaurants
- Skip the daily trip to Starbucks
- Drink less alcohol
- Ride a bike more, and drive less
- Have Netflix movie nights at home instead of going to the theater.
Of course, there are plenty of other possibilities. Take a look at your own habits and see what changes you could make in 2019 to improve your finances.
Putting it Into Action
Talking about these things is great, but ultimately none of this matters if it is not put into action.
Now that you’ve read through the list, pick a few items that stand out to you can commit to taking action in the coming year.