If you want 2016 to be epic, you’ll have to think differently about your money. Hoping for more vacations? A bigger home? More time away from the office? A gym membership? All of these require cash, which means your dreams should begin with some fundamental financial changes.
I love tools and systems to leverage huge changes for my wallet. Why spend time thinking about my money when I can automatically save more than ever before? If you feel the same way, try these strategies in the new year.
Change how you use direct deposit. Few people use this little tool strategically. If you use direct deposit to send your paycheck to your checking account (like most people), you’re telling your subconscious mind that this money is available to spend. If you’re truly going to pay yourself first, use direct deposit to send money to your savings account instead. You can then set up a transfer from your savings to your checking account for the amount you need for expenses.
Why is this effective? Money in a savings account tends to stay there because in your head you think of the money as savings. This one simple change has helped people who can’t save money suddenly save more than they thought possible.
Embrace apps. Not using technology with your financial plan? Come on, it’s 2016! Financial apps are making a big splash, and the good ones all use bank-level security.
Check out apps such as Mint to track expenses, Digit to automatically save money, Acorns to stash money into the stock market a little at a time and Robinhood to invest without fees. These are only four of the hundreds of fantastic fintech apps that have hit the market in the last few years. Two other interesting tools gaining popularity include Tip Yourself, which helps you give yourself some money for accomplishments or great service (much like you’d give a waiter), and Draft, which shows how your fees and portfolio results compare to those of others.
Sign up for a retirement plan. Sure, you say you can’t save for retirement — but if not now, when? A workplace retirement plan like a 401(k) is a great place to save because it’s easier for most people to save when the money is deducted automatically from their paycheck before they see it. Here’s one more reason you need to start a retirement contribution now: Compounding interest is a powerful tool to increase savings, and time equals money. So the earlier you start, the better.
Not sure where to start? Most plans offer basic investments like an S&P 500 index fund, which includes the 500 biggest companies in America. A simple approach is to start saving into that fund, and diversify as you accumulate more money into the plan. Later, you may use international stocks, small companies — or on the defensive side — bonds. Already save into a retirement plan? Celebrate the new year by increasing your contribution.
Meal plan. Here’s a way to eat healthier, save money and have some fun. Plan meals and a weekly time to visit your local grocery store. By starting with a plan, you’ll intentionally eat healthier, control expenses and schedule around busy days with easy meals or leftovers.
Many people leak money from their budget in two places that are easy to capture: restaurants and entertainment. By meal planning, you’ll find that you can start with a dollar amount you want to spend, and then work around that figure.
Start weekly family budget meetings. If you want to control entertainment expenses and curtail family fights, talk more often to ensure everyone’s on the same page. Dig through bills together. Examine investments together. Decide on big upcoming expenses together. The key word? Together. While spreadsheets and tools are fantastic, if everyone isn’t aware of where dollars are being spent, there’s potential trouble ahead. We love family budget meetings. Ours generally last 20 minutes and include a glass of wine, which is optional but helps relax the mood. What’s the agenda? Expenses. Investments. Upcoming expenses. Boom. It’s a quick, fun meeting, and we’re good to go for the week.
Here’s what I love best about these five ideas: Each is easy to implement, but together they can drastically change your handle on money. You’ll know where your cash is going through your direct deposit, retirement plan savings and apps, have a handle on the food budget through meal planning, and everyone will be on the same page. What a great way to start the new year!
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Podcast: 5 Easy Ways to Kick-Start Your Finances in 2016 originally appeared on usnews.com
