Emily Starbuck Gerson
The start of a new year is a time when many of us resolve to join a gym or start counting calories. Sure, prioritizing physical health is important, but the New Year is also an ideal time to take a close look at the health of your finances and start tracking your income.
Whether you’re feeling mired in credit card debt or not making enough money to set aside savings, why not make this your year to get financially steady? Follow these steps to help you get your finances into shape in 2019.
You won’t be as motivated to start tracking your income or getting your finances together if you don’t have a reason driving it, Winnie Sun, financial planner and founder of Sun Group Wealth Partners in Irvine, Calif., told Steady. She recommends coming up with three financial goals for 2019, with one being your primary goal. Maybe it’s to save for a family vacation, or to pay off some credit card debt. Then determine how much you’ll need for each goal.
Regardless of how much you make, there’s one rule of thumb to healthy finances, says Chris Chen, financial planner and CEO of Insight Financial Strategists in Waltham, Mass.: your expenses need to be less than income. While most people fear the word “budget,” Chen told Steady, “it’s really just a commitment to keep expenses below income.” Maintaining a budget can help you track your income and expenses and ensure more is coming in than going out.
Sun says you can set up a budget in a simple Excel spreadsheet, or download free budget worksheets from her website. You can also use an online tool like Mint to track money coming in and going out. If your expenses outnumber your income, figure out what, if anything, can be cut or reduced. If saving is one of your goals, include it in your budget as an expense.
If it looks like you need more income, and you already have a full-time job, Chen says to start there by asking for a raise. If you’re turned down, ask if you can work more hours, or if there’s another role you could apply for with better pay. If those aren’t options, Chen suggests looking for a job elsewhere that pays better, especially since the job market is strong right now.
If you can’t increase your primary income or reduce your expenses further, it’s time to look for extra work, Chen says. One option is to take a part-time second job with scheduled hours, like working at Home Depot on evenings or weekends.
If you need more flexibility, Chen suggests turning to the “gig economy,” where you can drive for Lyft, deliver food for Seamless, charge scooters for Bird, deliver groceries for Instacart, board dogs for Rover, rent out your extra room on AirBnB — you get the point. The best part is that you can do any combination of these jobs, and you only have to work when you want to.
Sun says these types of side gigs are not only great for extra income, but an ideal way to keep you diversified and broaden your skill set. “That’s a win-win, not only for yourself, but your future employer too,” she says.
If you only have a monthly or biweekly paycheck, it’s easy to track your income by looking at your checking account or budget tool, Chen says. But if you do lots of side hustles, you have money coming in at different times from various sources, making it difficult to track income the traditional way and maintain a budget.
If you use the Steady app and link it to your bank account, you can utilize the free income tracker to get an easy snapshot of your monthly income and see which jobs bring in the most money for you.
If your debt is under control, more income is flowing in, and you’re finding yourself with extra money leftover after your expenses are paid, it’s smart to focus on saving, starting with an emergency fund.
If you already have a buffer for emergencies, now it’s time to focus on any savings goals, such as buying a house, going on a vacation, or saving for college or retirement. Sun recommends creating separate accounts for each purpose and labeling it accordingly so you can stay focused on that goal. Plus, Chen says, the field of behavioral sciences has found that if money is set aside for a specific purpose, you’re less likely to dip into it for an unrelated purpose.
Whenever possible, Sun recommends automating savings to make it a no-brainer. This could mean having a portion of your paycheck automatically go into your retirement savings, or setting a certain amount to regularly transfer from your checking to your savings account.
If you use a traditional bank but rarely go to a branch, you may also want to consider switching to an online bank. “There are some really robust systems out there that could give you lower fees and could give you slightly higher interest on your savings,” Sun says. This isn’t ideal if you like to make in-person transactions or frequently withdraw cash, but it could be a small way to boost savings, Sun says.
Let’s be honest: Tracking income and expenses and setting aside money for savings can feel like a drag sometimes. To stay motivated, Sun recommends creating rewards or “celebration moments” for yourself whenever you hit a financial goal, such as paying off a debt or hitting a savings goal. “It’s not just about saving and skimping or that sacrifice for the future, but also celebrating financial wins in the short-term too,” she explains. It could be as big as going on a mini-vacation, or as small as buying that new pair of jeans you’ve been eyeing, but it’ll help you stick with your goals in the long run.