6 Ways to Get in Better Financial Shape This Year
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The new year is a great time for some #adulting. It’s financial checklist time people! You know what I mean – it’s time to get in better financial shape. Now is the perfect time to get things done; especially things that are part of your personal, professional or financial goals for the year.
Whether in the grocery store or life, lists are a great way to make sure you get the things you need to accomplish your goals. At the store, it’s getting the items you need to feed yourself or your family for the week. In life, making a checklist will help you check off all those financial boxes you’ve been avoiding and finally get to them!
Below is my list of items that should be on your financial checklist this year. In other words, everything you should have in order this year to get in good financial shape.
buy Life Insurance
If there is someone in your home who relies on your income, then you need to buy life insurance. Sometimes even young, single people take out a small life insurance policy so their parents aren’t burdened if something happens to them.
If you have children, this is an absolute must and non-negotiable. Financial experts recommend that you take your yearly income and multiply it by 10-12 to find out how much insurance coverage you need. I also recommend term life insurance not whole life insurance as it’s much more affordable.
If you’ve avoided purchasing life insurance because you don’t know where to start or what to buy, a site like PolicyGenius can simplify the process by giving you a range of quotes all at once and help you find the coverage you need at a price you can afford.
Start an Emergency Fund
An emergency fund is the more important step to take when you want to make your way to financial independence. Starting with $1,000 is ideal but eventually this emergency fund should be 3-6 months of expenses. Don’t let the amount overwhelm you and not start. Even if you can only start with $25 or $50 per month that’s better than nothing.
The reason an emergency fund is so important is because you can’t get ahead when paying off your debt or investing if you’re constantly using your daily cash flow to put out fires. If your car breaks down or your hot water heater fizzles out, an emergency fund will allow you to fix those problems without affecting your monthly budget.
The best way to start an emergency fund is to find a bank that has no minimum balance requirement, allows you to automate transfers and pays a decent interest rate.
Banks like Synchrony Bank fit that bill, all paying at least 1.75% on your spare cash.
Increase Your Retirement Savings
If you work a 9-5 job, go right to your HR department TODAY and increase your retirement savings by at least 1 percent. Chances are, you won’t even notice that 1 percent. If you get a raise or have an exciting work bonus, increase your retirement savings even more.
Making your retirement savings a priority this year will not only make you feel secure about your future but it will give you a nice cushion just in case you decide to change careers or want to retire sooner than expected.
Learn More About Investing
Even the most seasoned investor can always learn more. And, for all the beginners out there, investing is not as difficult as it seems. What makes investing challenging at first is that it’s like a different language.
There are so many terms like index funds, bonds, mutual funds and more so it can be hard to understand at first, much like your first foreign language class.
Eventually, though, the more you read, the more you will understand. Here are the 6 best investing books for beginners as well as a post on how to invest in stocks when you don’t know where to start.
You can also download an app like Stash Invest that helps you learn about investing by investing your spare change.
If you want to take it a step further, a robo-advisor like Betterment can help you manage your investments. If you’re a DIY investor, Ally Invest has a lot of tools to help you with your investment needs. The best part – both have no minimum balance requirement and are incredibly cheap to use.
Make a Will
USA Today recently reported that 64 percent of people don’t have a will. However, making a will is a very selfless act that you can do for your family. It makes things much easier after you’ve passed away because you have a very specific directive on how you want your estate to be handled.
If you don’t have a significant amount of assets, creating a will can actually be quite simple and you can do it yourself online. One common website that people use to fill out their wills is USLegalForms.com.
If you have a lot of assets or any other complicating factors, look up an estate lawyer today and make an appointment. Again, it’s one of those things that takes time and energy, but it’s truly a gift to your family in the long run.
Start a College Fund
Lastly, if you have children, start a college fund for them. College prices are skyrocketing and student loan debt is out of control. In order to give your children the gift of graduating debt free, it’s important to start as early as possible.
If you don’t have children but you want to go back to school, starting an education fund is also a good idea. After all, if you’re going back to school to enhance your skills or advance your career, it’s far better to go completely debt free.
Ultimately, if you want to get in better financial shape this year – it is possible if you start with a plan. Doing so will not only allow you to become more financially stable, but it’ll help you become more confident with your finances.
Is there anything I forgot? What’s on your financial checklist that’s not on mine? What are some other ways you’ve been #adulting lately when it comes to your life and finances? What are some ways you put your savings or finances on autopilot to make them simpler to manage?
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