Each year, millions of Americans start the New Year resolved to get their finances in order. Then, the motivation wears off and most people fall back into old habits and spending patterns, feeling stressed and overwhelmed.
Stick to your resolutions this year by focusing on small wins in your financial life and make little lifestyle changes that will last the long haul.
Here are five tips to kick-start your financial life in 2015:
1. Track your money weekly, not monthly
The word budget is sometimes more feared than diet. Both can be hard to get started! But instead of thinking of budgeting as a restrictive kind of “money diet,” shift your perspective and remember that a budget is just a way to track money in and money out. Set a weekly money date to update your budget. Tracking your income and expenses weekly instead of monthly creates a healthy habit of knowing where you stand with your money. This bite-sized process makes it easier to stick with long-term.
2. Increase Your Automatic Savings by 1%
The goal is to save about 20 percent of your net income toward various financial goals like debt reduction, building a cash cushion and retirement. Yet, people get overwhelmed by this number and end up not saving at all. Don’t fall victim to this trap. Instead, start small. Begin by setting aside 1 percent of your net income toward your goals. Then aim to increase it every year by another 1 percent until you reach the 20 percent benchmark. As the old saying goes, something is better than nothing, and even 1 percent can really add up over time.
3. Get Clear about Your Debt
Debt affects a lot of us. Instead of being terrified and ashamed of debt, face the facts and get clear about what you have. Write down all debt–the type, amount, interest rate, minimum payment– With this clarity, you can see where you stand and then begin the process of a debt reduction strategy.
4. Check Your Credit Score
Your credit report is a file on you and your credit history. It basically tells lenders how risky a borrower you are. So when it comes time to purchase a new home or new car, you want your credit report and credit score to be in top financial shape so you qualify for good interest rates. If you have not established credit yet, a good place to start may be to open up a credit card in your name. Charge your card only with expenses you know you can pay off every month. Get in the habit of checking your credit report and credit score at least annually, to confirm its accuracy. Make it easy: Set alerts in your calendar to check your credit report and score around your birthday. That way you’ll always remember when to do it.
5. Ask for More Money
I believe income is a huge factor in wealth creation over time, and we women need to get better at asking for more of it. Use sites like www.shenegotiates.com to improve your negotiating skills. Many of us already are negotiating with our kids, friends, etc.–so now it’s time to start paying attention to what works and what doesn’t work when it comes to negotiating about money.
With more knowledge and education, you can become comfortable asking for a higher salary or higher fees in business on a regular basis.
Wishing you all a fabulous and financially healthy 2015!
Brittney Castro, CERTIFIED FINANCIAL PLANNER™, entrepreneur and personal finance expert for women, is the Founder & CEO of Financially Wise Women, a Los Angeles based financial planning firm for women. She specializes in working with busy professional and entrepreneurial women who are passionate about life and want to gain clarity around their money. Brittney’s mission is to help women plan and create the life of their dreams, free from anxiety about money. She is known for her innovative, non-judgmental, compassionate approach to financial planning. She has been featured in the Wall Street Journal, New York Times, CNBC, Financial Planning Magazine, Investment News, and Registered Rep Magazine. Away from the office, you can find Brittney working out, drinking green juice, reading, playing at the park with her dog Arya and of course dancing. Sign up to receive your Financially Wise Toolkit jam packed with great tools and resources to help you on your financial journey at www.financiallywisewomen.com. Follow her on twitter at www.twitter.com/brittneycastro.