Financial fitness and physical fitness both take a lot of hard work, but let the start of the new year energize you! If you’re ready to get financially fit, why not tackle some long-term goals, like saving for a down payment or retirement? Even if you’re not quite ready to go that big, we’ve got tips to help you get your financial future in shape.
So, are you financially fit enough to run a money marathon?
Level 1: SAVE ALL THE MONEY
You can’t save money if there’s nothing left after you pay your bills. Here are some things you can do to make sure you’ve got bills covered and as much money as possible left over to sock away.
- Cut down on monthly expenses. You can pile up some serious cash by trimming down what you spend on utilities (pile on those sweaters), groceries and eating out. Track down better renter’s insurance or car insurance rates, and get rid of subscriptions you don’t use. Need help finding which ones you don’t need? Try Trim, which will even cancel the subscriptions you don’t want.
- Avoid late fees by setting up automatic payments for your bills or creating reminders so you pay on time.
- Get the best interest rate you can on your bank accounts. Unlike with debt, the higher the interest rate for your bank accounts, the better. This is money the bank pays you for keeping your funds stashed with them, so they can lend it to other people.
- Make more money (duh). This one is pretty obvious, but what if no raise is in your future? You can increase your income other ways, from picking up odd jobs to renting out your car or a spare room. Check out a full list of our suggestions here.
With all the extra money you’ve found, you’ll be able to get serious about saving for the long term, and that will make things easier later on.
Level 2: Ready to craft
your five-year plan
A five-year plan? That sounds like something an adult would do. Oh, wait, yeah, you are an adult … soon to be an adult with a five-year plan! Here are some common short-term savings goals you can start working toward now.
- Establishing or increasing your emergency fund. Even if you’ve already got one, you should check it every year to make sure it’s still enough to get you through a few months without income. For example, if you’ve moved to a more expensive place, you’ll want to up your emergency fund to match.
- Saving for grad school. If you plan to go to grad school, start saving ASAP. You can get grants, scholarships and student loans to help pay for tuition, but the more you can pay with your savings, the less you’ll have to repay later.
- Putting a down payment on your first home. When it comes to buying a home, the more you have saved, the less stressful it’ll be when closing costs, the down payment and moving costs start to add up. Estimate how much you’ll need to save with our home affordability calculator.
Setting your financial goals for the next few years, and taking the first steps toward them now, means a smoother road ahead — and, hopefully, less debt!
Level 3: You want to
invest like Ron Swanson
You don’t have to go around buying up all the gold you can get your hands on, but by putting part of your paycheck into a retirement account every month, you’ll be Ron Swanson rich one day. (Just keep your funds away from anyone named Tammy.)
- Figure out which kind of retirement account is best for you. There are a lot of options out there, and knowing you’re putting your money in the right one will give you peace of mind (and better financial returns).
- Calculate how much you need to save to retire with the lifestyle you want. You don’t want to be stuck working forever because you didn’t save enough.
- Don’t just set it and forget it when it comes to retirement accounts. Sure, setting up automatic transfers from your bank account to your retirement account every month is a great idea. But you should check in on your accounts at least once a quarter to make sure you’re contributing the right amount, and make adjustments to stay on track if needed.
Retirement is a complex topic that takes some homework, but Future You will be hugely thankful that Current You dealt with this now.
Ready to get financially fit for the long run?
If you’ve ever struggled with money, you know how terrible it feels and you probably want to avoid ever being in that situation again. Committing to a money marathon, not just a short sprint of good financial habits, is one of the best ways to make sure you’re financially secure for the long run.
Top image via Shutterstock; barbells via 530 Media Lab.