Everyone has those New Year’s resolutions that, even with the best intentions, seem to fall by the wayside. While it might be too late for some, there’s still plenty of time left in 2017 to fulfill your financial goals.
Courtney Lindwall, 24, an editor in New York City, says she set out at the beginning of this year to spend less money eating out. While she’s been better lately, she says she didn’t start working toward the goal right away.
“Around March, I was finally like, ‘Enough,’ and have been a little stricter about it,” she says.
In fact, mid-year is the perfect time to re-evaluate your financial situation and find new motivation for saving, says Catalina Franco-Cicero, director of financial wellness and a financial coach at Fiscal Fitness Clubs of America.
“We could all say that we get really excited at the beginning of the year,” Franco-Cicero says. “Then come summertime, we think, ‘Holy cow, I didn’t do anything. I really want to get remotivated.’”
Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, says he also recommends reassessing financial goals mid-year. Making financial resolutions at the new year almost seems to “curse” them, he says, and there are many events to plan for financially in the second half of the year, such as back-to-school season and the holidays.
Here are five areas to evaluate to help you become more fiscally fit in the last half of 2017.
1. Put together a status report
You need to understand your financial situation in order to set goals for improving it. Finding the money to save or pay off debt can seem doubly daunting if you don’t know how you’re spending your money each day.
Evaluate the last six months’ worth of your expenses and income so you can plan for the rest of the year. McClary suggests reviewing the following things:
- Your budget: Determine how much you’re spending each month on your home, car, food, and other living expenses.
- Your debts: Make a list of all your debts, how much you owe on each one, the interest rates, and any pay schedules.
- Your savings: Take stock of your savings accounts, including retirement accounts and emergency fund. Also think of things you would like to save for.
- Your credit score. (If you’re not sure how, you can check out our guide to getting your free credit score.)
“Really give yourself a full picture of your financial situation so you can then go in and identify your best ways to save,” McClary says.
2. Dig into your spending habits
Once you have a high-level view of your finances, take a closer look at how you’re spending your money.
Franco-Cicero says she uses Mint, a money management tool, with her clients to help them categorize their transactions — a process people can easily turn into a habit.
Then, evaluate your discretionary spending to see what’s not necessary or where you can cut back. For example, consider reducing the amount you spend on subscription services or dining out and use the savings to pay off debt or to boost a savings account.
One thing to remember is seasonal expenses, like heating and cooling, McClary says.
“You want to make sure you’re making adjustments to your budget, while at the same time, being mindful of the expense categories that can change on a seasonal basis,” he says.
3. Reassess your credit card situation
A key step in reassessing your debt is taking a look at how much of a balance you carry on credit cards each month, how much you’re paying off each month, and how long it will take you to become debt free at that rate. You can figure this out with a credit card payoff calculator.
“Say [to yourself], ‘Hey, if I continue at the rate that I am going, will I ever be debt free?’” Franco-Cicero says.
Then create a plan to pay off your debt. McClary says the most important thing is to craft it around what motivates you the most. For example, if paying off the credit card with the highest interest rate motivates you, focus on that. If paying off the card with the lowest balance motivates you more, check that off first.
And even if it seems impossible to pay it off, he says there are benefits to chipping away at your credit card balance: Your minimum payments could go down, and using less of your credit line can help your credit score.
4. Start saving for something
We all know that we should be saving, whether it is for an emergency, retirement, or vacation. However, 23% of Americans don’t save any of their income, and only 38% report making good progress toward their savings needs, according to a 2017 survey from the Consumer Federation of America.
One of the best ways to become fiscally fit is to start saving for something that motivates you. You’re more likely to stick with saving toward a goal that you set for yourself, Franco-Cicero says.
If you don’t know where to start, she recommends a so-called “curveball” account.
“Curveball” accounts are similar to emergency funds in that they can help you cover unexpected expenses. The difference is that your “curveball” account would be used for things like replacing the worn-out tires on your car versus using your emergency fund to repair a blown transmission.
Now is also a good time to focus on saving for a house, McClary says, because you’ll have six to eight months to save before the next home-buying season. You can plan how much you need to save by looking at your existing savings, the cost of buying in your desired neighborhood, your debt-to-income ratio, and your credit standing.
No matter what you’re saving toward, McClary says an ambitious goal would be to save 20% of your monthly income between now and December.
If you make $2,000 a month after taxes, that means you would put about $400 toward savings each month. If you start in August, you could save $2,000 toward your goal by the end of the year.
5. Stick to your plan
Establishing where you are and where you want to be is only half of the battle when it comes to being fiscally fit by the end of 2017. Sticking with your action plan, as with all resolutions, can be the toughest part.
To be successful, Franco-Cicero suggests automating everything you can, from paying your bills each month to putting money into your savings account. This way, you don’t have to think about making sure a portion of your paycheck goes toward savings — your bank account will do it for you.
Franco-Cicero also says you should find a “money buddy” who knows your goals and can help you stay on track. Be sure to find someone who also has a financial goal and who will stick to a schedule so you can check in with each other. It’s a good idea to pick someone with whom you feel comfortable talking about money, not someone who you feel passes judgment on your purchases.
“We can be very lenient with ourselves, so you’ve got to find somebody who will hold you accountable,” she says.
Lindwall has had success following a similar approach. She says cooking more at home with her boyfriend has helped her stay on track toward her goal of eating out less.
“The biggest thing is getting someone else on board to do less expensive things with you,” she says.