If you’re anything like me, then you have already reviewed the past year, hit the gym a few more times than usual, mapped out your long and short term goals, and have a bucket list of places you can’t wait to visit. I’m thrilled that 2016 is behind us and I can’t wait to see what 2017 brings.
You’re probably also feeling a bit more hopeful, so use this positive energy to focus on what you really want to accomplish. Think out of the box and get creative so you meet each and every challenge you may face with success. After all, your financial resolutions are probably linked to your overall wellbeing. I’ve compiled a few of my own financial resolutions. Perhaps you can apply a handful of these to your life.
Give to Charity
I’ve already donated clothing and furniture estimated at $12,000 to Goodwill and to a few shelters. This is actually a family tradition, so it’s built into my system that giving to charity is a must. Whether you choose to to give away some of your old belongings or donate a portion of yours earnings to your favorite charity, your donation acts as a tax deduction that can lower your tax bill or boost your refund. Your deduction corresponds with your highest marginal tax bracket. In other words, if your last dollar earned corresponds to the 25% ordinary income tax bracket, you can receive a $0.25 deduction for every $1 you donate.
Turn a Hobby into Cash
I’ve been a writer, photographer, and painter for nearly 15 years. Fortunately, we also live in an age where we can work virtually from anywhere in the world and actually get paid to do what we love. Join Fiverr and other platforms specifically designed for freelancers. If this doesn’t ring a bell, the Google is your best friend! If you have hobbies that you enjoy outside of your normal job, consider turning those hobbies into a second income stream. Writing and blogging, for instance, is an excellent way for you to keep your steady job and earn extra pocket change. Also, I have a few friends who have done exceptionally well selling on channels like Amazon, eBay, and Etsy. These are the perfect platforms for individuals to reach larger audiences. Monetize your hobby by selling handmade crafts, electronics, or other products that are of interest to you.
Stick to a Budget
This is probably the most basic resolution to accomplish and yet according to a 2013 Gallup poll, only a third of all Americans keep a detailed monthly budget. By not keeping a budget, you’ll have a poor understanding of your cash flow, which makes it nearly impossible to adjust your spending habits. The hardest thing to do is stay committed and accountable to your budget. That’s where being SMART comes in handy, by forming specific, measurable, achievable, realistic, and time-based goals, you’ll have a way to measure your progress. Have a clear, concise financial goal for the year. Write a financial resolution that is clear and actionable.
Pack the Lunch and Eat In
A new survey shows that 45% of Americans spend the most on food, which proves that eating out is a our biggest trap. Watch out for restaurants, takeout, and delivery. Even if you only eat out a couple times per week, if you take pack the lunch and eat in for 1 month, you will notice how eating out really takes a bite out of our budget. Making your meals at home allows you to control exactly what goes into your body. It also gives you more one-on-one time with your spouse and children.
Collect Your Spare Change
Any time you make purchases with cash, spend whole dollar amounts. If you go to the grocery store and your ticket comes to $78.39, pay $80 in cash and pocket the change. When you go home, throw the money in a large container. If you adhere to this trick and don’t spend any of the change, you’ll likely save several thousand dollars over the course of a year. Use the money for the next holiday season or to go on vacation.
Contribute to a Roth/Traditional IRA
If you haven’t done so already, open and begin contributing to an individual retirement account. Opening up either a Traditional IRA or Roth IRA, both of which have $5,500 contribution limits in 2017 for those aged 49 and under, and $6,500 for persons aged 50 and up. Both offer important tax advantages that can add up to a significant amount money by retirement. A Traditional IRA is a tax-deferred account, meaning you’ll owe federal tax once you begin making withdrawals during retirement, but contributions can also lower your current-year tax liability. Gains in a Roth IRA are free of taxation when taking withdrawals during retirement, but there’s no upfront tax deduction as with a Traditional IRA.
Check Your Credit Report
According to the Consumer Financial Protection Bureau, just 8% of all U.S. adults with credit files accessed their free annual credit report. 92% of Americans have no idea what could be lurking on their credit report. Checking your credit report is free once a year, and it doesn’t hurt your credit score. Go to AnnualCreditReport.com to get your free annual credit report from all three reporting bureaus (Experian, Equifax, and TransUnion). You should check all three credit reporting agencies, since errors are very common.
Adjust Your Tax Withholding Status
In 2017, make the effort to adjust your federal tax withholding rate to get to as close to $0 owed/refund as possible. Doing so could put more money in your pocket with each paycheck, which means more capital you can use to build your emergency savings, pay off debt, or kick-start a retirement account.
Set Up an Automatic Savings Plan (ASP)
With automated savings, the cash is drawn directly from your bank before you can get your hands on it. Set up an automatic savings plan (ASP) with a broker or your bank that would automatically withdraw a set dollar amount each week, two weeks, month, or quarter from your checking or savings account. For those of you who struggle to save and invest, an ASP is the perfect solution. Automatic savings plans are now offered for everything from brokerage accounts to government bonds. Clink also uses a set it and forget it approach, which is why it’s my go-to app for saving and investing.
Health is Wealth
Since the beginning of the year, I already made it my personal goal to run a half marathon. My focus has shifted to get 7 hours of sleep every night, eat a wholesome breakfast every morning and work out every day for a minimum of 30 minutes. This will keep my thinking clear and will lead to more productivity at work.