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Get Financially Fit in the New Year

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January 27, 2022

New year, new you!

If you’re anything like us, you’ve likely already set yourself up with a whole slate of resolutions to fill your year with self-improvement and success. While you’re prepping for a year of positive development, don’t forget to think about your financial fitness in 2022!

Although you can change your financial habits whenever you’d like, now is a great time to take stock of your financial goals and decide how you want to prepare for both your short-term and long-term future. With some time, a little effort, and planning, you could be well on your way to improving your financial health and creating a bright financial future.

Get SMART About Your Goals

It’s pretty difficult to achieve financial success if you don’t have a plan and can’t measure it. Before getting excited and making several life changes, sit down and think about what you actually want to do financially.

Do you want to pay down debt? Fully stock your emergency fund? Do more with your investments? By taking a step back and truly understanding what you want to achieve, you can start making more sense of which goals to work toward.

SMART goals are a great way to hold yourself accountable and lay the groundwork for success through easily trackable and clear goals. For those of you who are new to the SMART system, it stands for:

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Time-Bound 

As you start establishing your accountability system, keep these ideas in mind. Need an example of what a SMART goal might look like?

I want to save $2,000 for a vacation. This means I will need to save $200 each month for 10 months. If I cut down on eating out and limit my subscription services, I can reach this goal. I can also pick up some side work to help me put away additional money.  If I make a few changes, I can put away a couple of hundred dollars each month. To afford my vacation, I will achieve my savings goal in 10 months or fewer.

By establishing firm and easily trackable SMART goals, you can keep track of your financial progress each week or month and see your achievements in real-time.

Don’t be afraid of the time element, either. In some cases, this is freeing. You basically give yourself an open-ended problem to solve. As long as you accomplish the goal, it doesn’t really matter what steps you take to get there.

Make a Budget

This should be pretty self-explanatory. It’s impossible to know where you stand financially if you don’t have any idea how much you’re spending or saving at any given time. Financial planning and budgeting are all about making sure the amount you’re spending is less than what you’re bringing in. There are plenty of budgeting apps available today to help you get started, so pick one that works for you and use it!

Track Your Debt… and Pay It Off

If your goal is to become more financially independent, one of the best things you can do is pay down or pay off your debt. Plan to pay more than the minimum amounts on your loans if you can, and know which loans carry the highest interest rates. Credit cards are generally high-interest debts, while student loans and mortgages have lower interest rates. In any case, paying the minimum amount each month ensures you’ll be paying off the interest on your loans rather than the principal.

Put Your Needs First

Self-improvement is about putting yourself first, which means paying yourself along with your bills. Let’s say you get a paycheck every two weeks. Paying yourself first could mean taking a small amount of money, setting it aside, and investing it into your Beanstox account.

Invest the Seriously Simple Way

Don’t have a Beanstox account yet? Download the app and start investing today.

Remember, putting your needs first does not mean buying a new pair of shoes or getting a round of drinks for the entire bar. If you’re trying to practice better personal finance habits, focus on taking actions that make you money!

Set Better Financial Boundaries

This is a vital step in the process toward improving your financial health. Whether we’re buying our children the latest gadgets, treating our friends at every happy hour, or loaning money to a friend who “will pay you back next week,” little expenses add up.

Be honest with yourself and look at what you spend and how often you spend it. Try not to take on any new debt and pay off the debts you do owe. Cut back on things you know you can easily live without, and use that extra cash to build on your retirement savings. Set spending limits and stick to them.

You don’t have to go 0-60 and shut down all your spending. Instead, take a step back, look at what you’re doing, and cut back some. Your investments, savings, and checking account will thank you!

Don’t Give In to Peer-Pressure

It’s natural to want what other people have, especially if it’s shiny and new. New car, new home, new everything. If someone else has it, we want it. Remember that actions have consequences, and not all of them are good.

Let’s say, for example, your best friend just bought a house. You’re proud and excited about her accomplishment, and now you’re thinking about a home of your own. But if your finances are a mess,  you haven’t looked at your credit report in 7 years, and you just had to clear space in your closet for your growing sneaker collection, you might not be ready for such a big financial commitment.

Sure, buying a house would be great, and mortgage rates are currently low, but homes are expensive and sometimes come with hidden costs that your finances can’t support. From asbestos removal and renovations to taxes, insurance, and all kinds of other expenses, homeownership can add up quickly. If you aren’t ready for that kind of financial commitment, don’t let outside forces attempt to make you think you are.

Be Your Own Financial Cheerleader

When was the last time you got a raise? If you’re a good worker and can make a case for yourself, ask for more money at work. Or, if you’re interested in a change, consider a different career entirely. Make sure to keep in mind everything associated with a new job, not just compensation. Ask about health insurance, stock options, performance-based bonuses, and other compensation.

Create Other Income Streams

Are you a good writer? Why not offer your services to help spruce up résumés and cover letters? Can you bake? Consider a home-based bakery. You never know how far your passion can take you until you try.

Every dollar you make can go to good use. Boost your emergency fund, make another contribution into your Beanstox account, or even put it toward your short-term goals.

Invest the Seriously Simple Way

Don’t have a Beanstox account yet? Download the app and start investing today.

Stop Buying Things You Don’t Need

It sounds harsh, but there’s a good reason. When was the last time you went to your favorite store for one item and walked out with three carts full of stuff and a sinking feeling in your gut? Yeah, it happens to the best of us.

Of course, as Beanstox Chairman and co-owner Kevin O’Leary explains, the money you’re currently spending on things you don’t need could do a lot more if it gets invested.

If you cut out the things you don’t need, you can reduce your financial footprint. As your footprint gets smaller, your money will take you further. It’s a good rule of thumb to try to live below your means, so if something happens and your income drops, it won’t feel like such a shock to the system.

Set Aside Money for Improvement

Improvement comes in many forms, and most of the time you can achieve personal growth without spending a dime. Volunteer with local charities to learn how others live and gain a new perspective. Visit your local library and borrow books to read. Watch YouTube videos to pick up lucrative skills.

If you’d like to spend a little money and sharpen your abilities, try LinkedIn Learning, Masterclass, or Udemy. There are so many options to check out and thousands of classes available.

Speaking of classes, if you want to level up your career, consider putting money aside for classes at your local community college. You don’t have to dive in feet first, but knocking off one class at a time will eventually pay off.

Invest

Did you think we’d get all the way through this article without encouraging you to invest? Yeah, thought so.

If you have extra money at the end of the week, month, or year, consider investing it into your personalized ETF portfolio with Beanstox. If you don’t invest with us, that’s fine too. The point is to simply invest.

Invest the Seriously Simple Way

Don’t have a Beanstox account yet? Download the app and start investing today.

The longer you leave your money in the stock market, the more time you have to build your assets and create a better financial future. If you’re interested in learning more about how investing in the stock market compares to a simple savings account, check out the math.

The Final Word

Advice is great, but it doesn’t work if you don’t apply it. Like anything else in life, start small and add to it once you’re comfortable. Build habits for success and keep them going as you keep growing.

If it doesn’t work at first, that’s ok too. Needs change, and sometimes problems will pop up while you’re putting these tips to use. Don’t get upset or give up. Remember, nothing is concrete. As long as you continue to improve each day, you’ll eventually reach your goals and step into a brighter financial future!

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