How advisers say you can do it without a lot of effort
Did you resolve to save more for retirement this year, become debt-free or put cash aside for a bucket-list trip? We’re more than a month into the new year, but there’s still plenty of time to turn your finances around in 2017.
Next Avenue spoke with a few noted money experts for their suggestions. Here are 10 recommendations:
1. Write down your financial goals. Jotting them down can help you visualize where you’re going. “Often, the sense of being overwhelmed comes from not having a clear picture of your goals and how to achieve them,” said Aron Levine, head of Merrill Edge, an investing firm under Bank of America. “Outline your goals in a way that’s specific enough for you to act on them, but flexible enough to allow for more than one approach.”
2. Take stock of your expenses. Start writing down every single expense for a few months. “I mean all of them,” said Adam Torres, CEO of Century City Wealth Management in Century City, Calif. “This includes those small reoccurring subscription expenses that can usually go under the radar for months whether or not you are actually even still using the services.”
After doing this, Torres said, cancel the expenses you’re not using and items that don’t affect your lifestyle drastically. “I don’t recommend cancelling everything at once. If you do that, it is likely you will just add new expenses shortly after,” Torres said.
3. Pay yourself first. This is a time-honored tip, but still holds true. It means: treat your savings goal as a monthly expense, not an afterthought. “Take that money off the top of your income and not from what’s left at the end of the month,” said Levine. “Then take a look at your budget to identify areas where you can cut back to free up more money to save.”
4. Sign up for an automatic savings plan at your bank. This is especially worth considering if you’re not disciplined enough to pay yourself first. Think of this idea as the equivalent of autopay plans for your bills. “You can set up recurring transfers from your checking to your savings and investing accounts,” said Tony Drake, a Certified Financial Planner and owner of Drake & Associates in Milwaukee. “You can’t spend money you can’t see.”
5. Pay off that credit-card debt. Otherwise, it will continue to drag your finances down. “You need to organize your debt and start attacking the lowest balance first by paying as much as you can on that card all while maintaining minimum payments on your other cards,” Drake said. “To clarify, I am not saying we shouldn’t use credit cards, but we should use them responsibly and pay them off monthly.”
6. Get in the habit of splurging strategically. Just like with diets, if we try to deny ourselves pleasure, it typically doesn’t work out well. Drake says: If you like cappuccino or espresso, invest in a machine to make cups at home. If you enjoy a good steak, purchase a grill to cook this meat. “A good way to determine if a purchase is really worth it is to take the price of the item and divide it by the number of times you will use that item. Then use that number to decide if it is worth it,” Drake said.
7. Get smart about making loans and gifts to family members. No one wants to see their children or grandchildren struggle or lose that dream home they want. However, Drake said think long and hard about helping family members financially. That’s what he tells his clients, too.
“You should not give or loan money without knowing you can live without it being paid back,” said Drake. “This is especially important if the you are close to retirement, when you will have to live off your savings and investments. Children will likely have another opportunity to buy a home, but parents may not have another chance to catch up on retirement savings.”
8. Try to sell your unwanted stuff. If you have antiques or other items sitting around that you no longer want or use, look for ways to unload them to buyers. Rare, or first-edition books might bring in more than you can imagine. But it can be difficult to attract purchasers for some types of furniture, jewelry and other items, as this Next Avenue article explains.
9. If you’re nearing retirement, start looking for ways to supplement your income. “I have seen many people entering retirement drive an Uber on the side to pay down debt and begin to fatten their retirement savings,” said Torres. If you don’t like to drive, perhaps you can turn a hobby into supplemental income or become a paid consultant in your previous career field.
10. Don’t be afraid to ask for help. “Turning around your finances is no easy feat, especially when you have competing priorities,” said Levine. “There is no shame in turning to (legitimate) online resources or meeting with a financial solutions adviser who can help you determine your goals and put a plan in place to pursuing them.”