It’s a new year, and you are pumped to make some changes to your finances. Only you don’t know where to start and you’re afraid to make a mistake. You’ll totally get around to it, though … once you’re done with a bunch of other chores you just remembered you had to do right now.
I know. It’s easier to wrap your head around a to-do list item like “mop bathroom floor” than the one that says “start saving for retirement.”
But here’s the thing: you can make pretty big changes to your financial situation with just a few teensy money moves. Many of these only take a few minutes! Some take a little more time, but trust me — they’re worth it.
Don’t let another year go by without looking at your finances and taking a few steps to grow your wealth even more. Here are 17 easy money moves to make before you start making plans for your next New Year’s party (and 6 apps that can help!).
Checking and Savings: Stash Your Cash in a Better Place
- Begin by reviewing your checking and savings accounts. This is as simple as logging into your accounts and seeing what your balances are. Are you hoarding cash in a low-interest checking account? Do you have a large sum of excess money you can use to pay off some debt? It helps to know where you stand right now!
- Make your cash reserves earn more interest. Keep enough cash in checking to pay your monthly expenses (plus a small buffer so there’s no chance of overdrawing your account). Anything beyond that should move into a high-interest savings account. I often recommend Ally Bank, which pays 1% and has an easy-to-use website. You can also use Bankrate to compare what different banks are offering.
- Save for emergencies. Most Americans can’t afford a $500 surprise expense and have less than $1,000 in savings. Aim to save up three to six months of living expenses in your savings account. Keep this money separate from the cash you use to pay your regular expenses — you don’t want to be tempted to tap into this money for non-emergency situations.
- Categorize your spending. You can set up different savings accounts for different goals (like emergencies, travel, down payment on a home, etc.) and automatically transfer money into each. Studies show that by naming your goals, you tend to save more money at a faster rate!
- Download this app: Digit reviews your spending habits and moves money from your checking account into savings. If you struggle to save, Digit can help.
Retirement Savings and Investing: Make Your Money Work Harder
- Increase 401(k) contributions by 1%. If the idea of increasing your 401(k) contributions makes you nervous, try upping them by just 1%. You’ll barely notice the difference! In fact, set a reminder to up your contributions by another 1% in six months. Aim to get the full company match, but your eventual goal should be contributing the max ($18,000 a year).
- Make that Roth IRA happen. If you qualify, contribute $5,500 per year (it doesn’t have to all be at once — you can set up monthly transfers!).
- Seriously, start investing. Gen Y has the benefit of a long time horizon, which can allow your wealth to grow! But a lot of millennials are afraid to get started. Thankfully, the internet makes it easy: open a Vanguard or Betterment brokerage account (for Vanguard you often need a $3,000 minimum investment) and set up automatic money transfers. If you have enough cash savings to cover expenses and emergencies, and you’re funding your retirement accounts, investing is the next step!
- Download this app: Personal Capital keeps track of your investments and portfolio allocations, and even lets you know how fees will affect the long-term growth of your retirement accounts (my tip: keep investment expense ratios under 0.5%).
Save More Money (So You Can Spend it on Something Better!)
- Have a weekly money date with yourself, your significant other, or your roommates. Take the time to go over some of your finances or discuss shared expenses. This is a great time to figure out where you can cut back. (Opening a bottle of wine might help these talks go more smoothly!) Pro tip: set it up as a recurring weekly meeting on your calendar.
- Renegotiate some of your bills. You stand to save hundreds of dollars per year just by asking for a lower rate! If the mere thought of sitting on hold with your cable company or cell phone provider gives you hives, try a service like Bill Shark, which negotiates lower bills for you in exchange for a cut of your savings.
- Stop paying for things you don’t use. Whether it’s a magazine subscription or professional dues for an organization whose events you never attend, inventory the things you pay for that don’t benefit you in any way.
- Download this app: You Need a Budget can help you know exactly where your money is going.
Debt: How to Pay it Down Faster
- Apply excess cash to debt. You freed up some cash by renegotiating a bill, moving in with a roommate, or taking on a side hustle. Put 100% of that extra money to your student loan or credit card debt. The faster you pay it off, the less you’ll pay in interest.
- Change how you think about debt repayment. If you have significant debts but want to start investing, paying down your debt is a form of doing that. If you have credit card debt with a 15% interest rate, paying down the debt guarantees at 15% rate of return!
- Consider refinancing your mortgage or student loans. You can lower your interest rate and/or monthly payments by refinancing a loan. For a mortgage, keep in mind that you need to repay closing costs when you refinance. And if you have a federal loan, refinancing can cause you to lose access some of the repayment programs those kinds of loans offer. Do your research to see if refinancing can save you money. I’ve had a few clients use SoFi to refinance their student loan debt and save thousands of dollars on interest.
- Download this app: Unbury.Me helps you create a plan based off of your choice of debt repayment techniques (highest interest first or lowest principal first).
Get Control of Your Credit
- Check your credit report at least once a year. Errors on your report can negatively impact your credit score (and those errors might be the result of identity theft!). You’re entitled to a free credit report from each of the three major credit bureaus per year.
- Sign up for a credit card that earns you better rewards. Stop using the same no-frills card you had in college. If you have excellent credit, switch to a card that earns you rewards points to apply toward travel, cash back, and more.
- Download this app: Credit Karma lets you check your credit score for free. It’s not technically your FICO score, but it will give you a close estimate free of charge.
Build Your Career
- Always be ready for the next opportunity. Update your resume and LinkedIn profile at least once a year, or whenever you switch jobs or get a promotion.
- Ask for a raise. Make your case with specific examples of how your work has positively impacted your company. (And when you get that raise, apply that extra money toward retirement savings or debt payments — prevent lifestyle creep!)
- Download this app: Job hunting? Indeed makes it easy to apply! You can upload a resume and cover letter and fire off job applications from anywhere.
