Seize the New Year to Create a Better Financial Future
If at some point in this last 12 months you found yourself feeling stuck, then you are likely yearning for progress in the new year. You’ve put your hope out into the universe that things will be different, but now is truly the time to take action. Optimizing your finances is the fastest way to achieving the changes you seek.
Perhaps you are looking to make a career shift, shake-up your scenery, or feel assured that your dreams for the future are falling into place as time marches on. Cultivating a solid financial foundation is a sure way to take advantage of as many opportunities as life offers. Carefully consider if one or more of the following steps is the key to your liberation:
Pay Down Debt
With major shifts in the stock market, some experts are saying that focusing your money toward eliminating debt may be the best bang for your buck. The logic is the stock market returns, depending on investments, may not outweigh the interest charges on credit cards and other loans. So, your debt may be hurting you more than your investments are helping. This isn’t to say you should cease all investing, but rather you may consider delaying an increase in contribution or slow your pace of packing in money. Use extra funds to power charge your debt repayment. Once paid in full, you can then turn your priority back to building your nest egg.
What to do: Pay more than the minimum payment required on your credit account with the highest interest rate.
Build Purposeful Savings
Possessing a fully funded savings for emergencies not only does wonders for your peace of mind but also allows you choices you wouldn’t otherwise have. If you were to lose your job, you wouldn’t feel desperate to take a lackluster position solely because you couldn’t survive without the income. You could instead allow some time to find a job that’s fitting and enjoyable.
Savings can also provide through times of transition. If you’ve considered dialing back some work hours to return to school or are tempted by a dream job out of state, savings can be the buffer you need to take the leap. This flexibility will reward you with far more than financial benefits in the new year.
What to do: Set up a new savings account and name it according to your goal i.e. emergency fund, moving fund, post-college fund, travel fund, etc.
Add a Stream of Income
This concept is as simple as avoiding putting all your eggs in one basket. In the event that a part of the economy failed, would your job be secure? The answer for everyone isn’t always positive. A second source of income can be your back-up. It can also be a great way to grow your wealth quicker and provide for you during your retirement.
You could choose to spend free time on a side hustle, providing services in areas where you are passionate or talented.
However, the most ideal income streams require little ongoing effort. Think real estate, investment dividends, or sales through a website. Business savant, Warren Buffet once said, “If you don’t find a way to make money in your sleep, you will work until you die.” These words may be unsettling but are nonetheless true.
What to do: Start now researching ways to make money outside of your day job. Decide what is best for you and your financial situation, then implement your plan. It may take more than 2019 to get set-up, but the sooner you start, the more money you’ll claim for yourself.
Negotiate Higher Pay
There might be a number of reasons you deserve to be paid more in this new year. Perhaps, you’ve done an excellent job in your position directly or indirectly bolstering your company’s bottom line. There may be talks of you assuming a new role. In the very least, you deserve to have your wage keep pace with inflation. Whatever it may be, if you are in great standing with your company, this is the year to ask to be paid what you know you are worth. Pay increases are rarely handed out without a bit of prodding. So, if you don’t ask, the answer will always be no.
One of the common traits of people with successful careers is that they are their own champions, constantly pushing forward and not afraid to insist on fair compensation. A pay raise may not seem worth the discomfort but consider how much more you’d earn over a lifetime with even a 3% raise. A person making $35,000/year would make over $1,000 more annually or $31,000 more before retirement all because of one raise. Now think of the impact if you were always vigilant in negotiating your pay.
What to do: Gather hard evidence as to why you deserve a raise. This may relate to your skill set and how it’s created more profit, helped cut costs, or trained up the co-workers around you. Then research the pay range for your position and be prepared to reference what competitors are paying. Schedule a meeting with your immediate supervisor and give them a clear picture of the value you bring.
Give your company a couple weeks to respond to your request. Be sure to decide how you will proceed if a raise isn’t possible.
Increase Your Retirement Contribution
If all your shorter-term goals are met, then maybe this new year is the time to take your retirement savings more seriously. This could mean reassessing the amount you are contributing, your investment vehicles, or the balance of your portfolio in regards to risk tolerance.
What to do: Dive into research or sit down with a financial advisor for advice on better preparing for life after work. Make the adjustments necessary to ensure you’re on track.
The change that a year’s worth of time can bring is remarkable. Believe, that if you make the effort to improve your finances, you can create a better life in less time than you think.
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