Looking for a fresh financial start this year? By making mindful changes, you can detox your spending habits and set yourself up for financial success.
Here are a few ways to embark on a financial cleanse to kick off the new year.
1. Revisit your values.
It’s easy to lose sight of how our spending reflects our values and priorities. Before you start deciding where to cut back, where to invest more and where to save, set aside time to think about how your spending and your values are connected in the big picture. Consider both your short-term and long-term goals: Where do you see yourself in five, 10, or 20 years? What kind of retirement do you want? What kind of experiences do you want for your family?
Leading with your values when making money decisions can help you prioritize your expenses and make sound decisions that will take you where you want to be in the long run, whether that means planning a family vacation or creating a game plan for retirement.
2. Look for opportunities to scale back.
With your values in mind, look at your spending from the past year and keep an eye out for patterns. For example, perhaps you spent more on groceries or takeout last year than you realized. For each area where you’d like to reduce spending, write down one or more small ways you can cut back. Strive for achievable goals that you can stick with, like searching for coupons before you head to the store or reducing your takeout orders from three times a week to twice a week. Over time, small savings can add up to a big difference.
3. Find opportunities to save.
After you’ve paid recurring expenses like rent, auto loans or utilities each month, how much do you have left? Are you setting extra income aside into a savings account, or are you spending it without much thought?
If you’re not already saving, aim to begin putting aside some of your discretionary income in a savings account each month. Set up an automatic transfer so you won’t have to think about it—and so you won’t be tempted by extra money sitting in your checking account!
If you are already saving, revisit your plan to see if you can save a little more. Even a small boost each month can add up to hundreds of dollars each year.
4. Consider a no-spend month.
If you need a goal to help you stay motivated, consider trying a no-spend month. This can be a great way to boost your savings and take an honest look at your spending habits.
Of course, you’ll still need to spend some money during a no-spend month, from the electric bill to your mortgage or rent and groceries. Choose your no-spend month ahead of time so you can go in with a plan. At the end of 30 days, see how you feel—and how your bank account looks—then determine if there are any new habits you want to take into the next month to keep your spending in check.
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