Today’s article is a guest post from Trisha on how to reinvent your financial identity in 2017. Trisha is a writer from Boise, ID. She is a dedicated vegan, an avid gamer, cat lover, and amateur SFX artist. You can follower her on twitter @thatdangvegan or check out her blog thatdangvegan.com
As 2016 is coming to a close, I’m beginning to forecast out my expectations for 2017 and set goals. Now is as good a time as any to begin reinventing and upgrading your financial life. Enjoy the article!
How to Reinvent Your Financial Identity in 2017
Most of my adult life, I have gotten by financially. I lived paycheck to paycheck, but I was always okay with that. If an emergency happened, I could usually find a way to cover the costs. Sometimes that involved asking my family for help, which I never liked doing, but I’d always get through it. I was always terrible at budgeting and dreaded checking my bank statement to see what new charges had shown up on my account.
Of course, I’ve gotten more financially responsible as the years have passed, but I’m still not quite where I want to be. If you’re like me, and are ready to wipe your financial slate clean, you might not know exactly where to start. Here are a few empowering tactics you can use to reinvent your financial identity in 2017.
Set a Goal and Stick to It
My goal in 2017 is to be better at saving money for the future. Whether that means saving for a large purchase like a new car, putting money into a possible wedding fund, or maybe saving to remodel the garage, it doesn’t matter to me right now. I just want to be more prepared to do what I want in the future. So, that means coming up with a tactic for better saving.
A good rule of thumb for saving is to try and save 10-20% of each paycheck. This is something I’ve known for most of my life, but really haven’t tried very hard to actually do. Even if it doesn’t seem like you’re adding a lot to your account every couple of weeks, just remember something is always better than nothing, and before you know it, you’ve got a nice little savings.
Improving your credit is also a great financial goal for the new year. I’ve made some bad financial choices in the past that have definitely affected my credit. I’ve maxed out a few credit cards. I’ve been late on important payments more than a few times. These are pretty common occurrences, but they can mess with your credit over time. Anytime you’re thinking about saving for a big purchase, no matter how near or far it may be in the future, making some changes to the way you pay bills can make your life a whole lot easier. This way, when you go to make a big investment like buying a car, starting up a new line of credit, or even purchasing a house, your credit score will never be holding you back.
Set up a schedule that works for you, not against you. Do some calculating of your paychecks and be cognizant of when those paychecks will be deposited into your account. Once you have an idea of about how much you’ll be earning and when the money will actually hit your account, figure out when the best time to pay your bills would be. Remember, the goal is to improve your credit, so you’ll want to make sure that all your bills are paid on time, if not early. Sometimes if you are behind, like I have been many times in the past, the best thing to do is set up a payment arrangement so you can get back on track. Just make sure that you don’t rely on arrangements. They should just be a one off situation to help you catch up to where you want to be.
If you’re thinking, “I barely have enough money to cover all of this. I feel like I can never catch up on all my bills,” then let’s now take a look at some things you can change with your spending habits so you don’t feel so constricted.
Living The Basic Life
No matter what your goal is in 2017, it’s always wise to cut out things that are simply superfluous in your life. You’d be amazed at how quickly the little things add up. A couple of TV/movie streaming services, a music streaming service, that toy subscription for your dog, 5 dollar coffees from your favorite drive-thru every morning, and (if you’re old school) a magazine subscription – some of these things are going to need to go. Especially if you’re living paycheck to paycheck, the first thing you need to do is take a look at all those tiny expenses that are easy to forget about.
Now, this doesn’t mean that you have to go back to the stone age, so to speak. Just make some choices about what is essential to your happiness and what is not. If you just want to keep one TV streaming service and get rid of the rest, that is a good financial decision. If you really love your gourmet coffee in the morning, then let that be your one indulgence, but take a good hard look at what the rest of your spending looks like and see where else you might be able to cut back.
Saving money and/or trying to improve your credit are two goals that honestly aren’t very fun for most of us. I suggest including a little bit of “fun” money aside from your paychecks each month. It doesn’t have to be much, but enough to have a nice dinner or go out to the movies. This way, you don’t get to the end of the month and feel like you’ve been so financially restricted that you can’t breathe. It gives you something to look forward to and makes you feel like you’re getting away with something sneaky, even though you know you already fit it into your budget.
Choose What Investments Are Important
Okay here comes the hardest part. When possible purchases come your way, take some time to think on them for a while. You’ll need to decide which investments are crucial to your success and which ones aren’t. Rent, student loans, and cell phone payments are all things that need to take priority before any other large purchases come into the picture. In addition, if you are feeling overwhelmed about crucial payments like your student loans, it might be a good time to look at some other payment options such as refinancing in order to make your payments more manageable.
Once you have your core finances in order, you can then begin to think about good investments for the future. For example, if you’ve been toying around with the idea of getting a new car, think about what would make the most financial sense for your situation. If you’ve already got the above expenses and then some, it might be in your best interest to wait. If you don’t want to wait, then you can either shop around for a car in a lower price range that would have much more manageable payments each month or simply save up enough until you can purchase the car outright! Wouldn’t it be nice to be without an extra payment each month?
I know, things come up from time to time that you just can’t help. That is why having a savings account is so important. If your TV breaks and you have to get a new one, or if your car breaks down and you suddenly need a replacement radiator, it can be really expensive. When these things happen, you shouldn’t have to take money out of your usual spending fund in order to cover the cost. Your savings cushion should be there to take your fall. What’s more, don’t be sad if you have to take money out of your savings to cover an unexpected event, especially in the early stages of saving. That is what it is there for–and guess what, you’ll just start adding money right back into it again.
Hopefully you can learn from my (and many other’s) financial mistakes. While making a financial plan isn’t always the most riveting experience in the world, rest assured that it is one of the most empowering things you can do for yourself and for your future.