The year is coming to an end and it is time to write down some new years year resolutions that you may or may not accomplish. You have decided that this time is different – this year that you will finish everything you start. First thing on the agenda is getting your financial life straightened out or polished depending on which part of the journey you are currently on.

Money habits have a profound impact on your financial future. Taking control of your personal finance is a matter of taking control of your financial habits.

Lucky for you, I have compiled a list of habits and goals that will help you dominate the new year.

Have a budget

A budget is the first step in getting your life on track. If you already have a budget, then proceed to the second point.

Now, this does not mean that you can only spend $200/month on groceries and nothing more. A budget, in my opinion, is simply understanding where your money goes. I really should have titled this sub-point “tracking your expenses”; however, it is a little more complex.

Tracking your expenses is only half the battle. A good understanding of how and when money comes in and out along with discipline to cut certain expenses, is my definition of a budget.

I used to spend $60/month on coffee until I got a coffee maker (it was gifted to me for Christmas). Now I spend less than $20/month.

Track your money and figure out how you can tweak your expenses to maximize your disposable income.

Related: How To Stop Living Paycheck To Paycheck

Create an emergency fund

Look, life has creative ways of throwing curve balls at you. Some of these curve balls include loss of work, car accidents, illness, etc. The question is, can you financially handle the challenges life throws your way?

A good rule-of-thumb that I constantly read is having 3 months of expenses saved up; some people say 6 and some have 12 months. At a minimum, 3-6 months should be the goal. I personally have a few friends and family members who have a different perspective on emergency funds.

It is a set dollar amount of money in which your bank account balance will not fall under.

For example: I know someone that never goes below $15K and when she lost her job last year, she was able to weather the storm of unemployment without stress.

My fiance and I never go below $10K collectively even while paying for a wedding.

Get rid of unnecessary debt

Debt, when not managed well, can be nasty because it tends to grow exponentially. Debt can put limitations on your financial freedom. If a group of friends invite you for dinner at a restaurant, you reconsider going out if you have high interest debt.

A great goal to strive for in order to maintain your sanity in social settings is to get rid of unnecessary credit card debt. Once the debt is gone, it may literally feel as though a weight has been lifted.

Student loans are another burden that we must get rid of. Developing a plan with a deadline and following through with it will free your debt and teach you financial discipline.

Pay your credit card in full whenever possible

Once the debt is gone, you must build a habit to paying credit cards in full every month. This may be an on-going battle. I sometimes fail to pay in full every month; however, when I fail to pay in full one month, the next month or two will often have an aggressive effort in reducing that balance to $0.00.

The objective is to pay off the debt as soon as possible every month. Whenever you pay interest on your credit card, you are giving money away to the credit card company. It is free money for them and wasted money for you.

On the contrary, paying your credit card in full every month ensures that not only are you debt free, you also don’t pay interest on your balance.

Another bonus is that it looks great on your credit report.

Related: Intro To Credit

Create new sources of income

If you struggle to pay your credit card in full because you live paycheck to paycheck, then you first need to read this post(link: how to stop living paycheck to paycheck) and then you need to consider adding new sources of income.

A new source of income, no matter how small, is a step closer to financial independence. After all, that is the reason we work hard, right?

Depending on what articles you read, it is stated that the top 1% usually have 3-7 different sources of income. A second job or side hustle is a great place to start.

Related: 6 Reasons To Have A Side Hustle

Ask for a raise

Negotiating a raise, assuming you are adding measurable value to your employer, is one of the easiest ways to increase your income by hundreds, even thousands, of dollars.

If you do not ask for a raise, your employer will most likely not give it to you. The reason is because not giving you that deserved raise is a great way for your employer to save thousands of dollars.

Here is a link to what I think is the best way to ask for a raise: https://www.iwillteachyoutoberich.com/blog/salary-negotiation/

Start investing

So, we have created a budget and now we understand how our money comes in and goes out. We have modified some expenses to maximize our disposable income.

With this extra money, we have decided to create an emergency fund. We are now equipped with the funds to take on most emergencies. Which is great!

We have gotten rid of all unnecessary debt meaning we have regained our sanity. Additionally, we have developed the habit of paying our credit card balance in full every month.

We have also created a second source of income and further increased our cashflow by getting that raise. You can almost taste the financial independence.

However, there is something missing. We need to start thinking long-term.

Investing is the best way for most people to amass wealth. There are many different avenues of investing. When the word investing appears, most people automatically assume the stock market. While it is a good place to earn 7-10% on your money, it is not the only place to invest in.

There are other markets to invest in: the stock market, the real estate market, peer-to-peer lending, and your own business – Just to name a few.

The best investment you will ever make is in yourself. What does this mean? It means the best way to invest long-term is to invest in your mind. This leads me to my next point.

Related: Good Reasons To Invest Your Money

Learn a new skill

Investing in yourself means you are investing in learning new things that will benefit your future. Adding value to your mind translates into adding value to others.

An example would be:

You work for a small company that is doing well but does not have a social media presence. So, you invest in a social media marketing course/seminar/articles/videos/etc.

You can then apply these skills within your company and potentially increase the company’s revenue. When a company earns more money because of you, they will do anything they can to keep you.

Conclusion

The goal for the New Year is to take control of your finances. Whether you are reading this in January, June, or when this post came out, do not wait until the New Year to start.

“The best time to plant a tree was 20 years ago. The second-best time is now.” – Chinese proverb, Why wait?

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