What to Do Each Month for a Financially Successful 2018
One of the most popular New Year's resolutions is to spend less and save more money. If you're committing to do this in 2018, it's a great way to get ahead financially -- that is, if you can achieve your goal.
A great way to ensure that you actually stick to your resolution is to create a month-by-month plan to avoid getting overwhelmed. If you tackle one of these tasks each month, you can have a successful -- and potentially rich -- 2018.
(By Cameron Huddleston)
January: Plan ahead
If you wake up on Jan. 1 reeling from a financial hangover from the holidays, start the new year by taking steps to avoid ending up in the same situation next year. "Much of the financial stress surrounding the holidays can be solved by planning ahead," said Melissa Thomas, owner of Melissa the Coach financial coaching.
Make a list of all your holiday purchases and add up how much you spent, Thomas said. Then, decide whether you will spend the same amount for the holidays in 2018. Divide that amount by 11 to figure out how much you need to set aside each month in a holiday savings account.
"Start saving in January and finish in November," Thomas said. "For example, saving $50 a month for 11 months will give you $550 for the holidays."
Also, factor in amounts for other gifts you'll be giving throughout the year, said Deacon Hayes, author of You Can Retire Early! "This way when birthdays, anniversaries and Christmas come, you already have the money in a bank account to make those purchases," he said.
February: Get serious about a budget
If you've shied away from creating a budget in the past, make 2018 the year you finally start tracking your spending and making a plan for your money. "Plain and simple, a budget will allow you to save more, spend less and bring peace of mind to your spending life," said Clint Haynes, a Kansas City financial adviser and president of NextGen Wealth.
Think of your budget as a spending plan for your money by figuring out where you want your money to go rather than what you need to cut out of your life. To get help planning your spending, download a budget template or use an app such as Mint.
March: Get ready for tax season
Avoid a last-minute rush to prepare and file your taxes in April by getting organized in March. By now, you should have received tax forms such as a W-2 or 1099. If not, reach out to your employer or financial institutions to track down those forms.
Also gather receipts you need to file your tax return -- such as receipts for charitable contributions, business expenses or child care. Put all of your documents in a folder labeled "taxes." And while you're at it, organize the rest of your financial documents into folders for household expenses, insurance policies, retirement accounts, debts and loans and so on.
April: Establish an emergency fund
Rather than blow your tax refund, use it to start an emergency fund. "A good rule of thumb is to save three to six months' of expenses into a savings account for a rainy day," Hayes said. "For instance, if you spend $3,000 per month, you would want $9,000 to $18,000 in a high-yield savings account."
Considering that the average tax refund is nearly $3,000, your emergency fund will be off to a good start. Then, you can set up an automatic monthly transfer from your checking account to your savings account to keep building your rainy day fund.
May: Profit from spring cleaning
Spring is a great time to go through your home and clean out all of the stuff you no longer need. "My rule of thumb is that if it has dust on it, it has to go," said Shannon McLay, founder of The Financial Gym, a financial services firm in New York.
You can profit from decluttering by selling items that are in good condition. Or, you could donate items to a charitable organization so you can claim a tax deduction if you itemize on your tax return.
June: Try a no-spend month
Despite your best intentions to spend less and save more money, you might have gotten off track. The halfway point of the year would be a good time to hit the reset button on your finances.
McLay recommends challenging yourself to a no-spend month. "Limit your variable spending to just basic necessities like food and fuel to get you to and from work," she said. It might help you break bad spending habits and help you come up with extra cash to boost your emergency fund or pay down debt.
July: Put your finances on autopilot
Before you head off on your summer vacation, spend some time automating your finances so nothing slips through the cracks while you're away. For starters, set up automatic bill pay for your service accounts -- utilities, cellphone, internet -- through your providers' websites or through your bank account.
Also, sign up to receive electronic statements by email rather than paper statements. That will help you to reduce clutter and keep tabs on your accounts even if you're not home to collect the mail. You also can streamline your financial life by setting up automatic transfers to your savings account or retirement account to guarantee that you pay yourself first.
August: Check up on your credit
You need to keep tabs on your credit throughout the year -- especially if you're planning on applying for a credit card or loan. Creditors will check your credit report and score before agreeing to lend you money, so you need to know where you stand.
Your credit score is a three-digit number based on information in your credit report -- such as your payment history, the types of credit you have and the amount you owe. You can get a free copy of your credit report at AnnualCreditReport.com. When you read your credit report, keep an eye out for errors that might be hurting your credit score.
You might be able to get your credit score for free from your bank or credit card issuer. Otherwise, you can pay a fee to get your FICO score -- the most commonly used credit score -- at myFICO.com.
September: Make all meals at home
If you were dining out during the summer months, September is a good time to reduce your monthly food spending. "The easiest way to do it is cooking at home," McLay said.
"I suggest taking an entire month where you commit to making every meal from home," she said. "It will not only save you dollars, but it will also help you drop pounds since you tend to eat less calories when you prepare food yourself."
October: Prepare for holiday spending
If you didn't start setting aside money each month from the start of the year, you still have time to prepare financially for the holidays.
Find ways to make more money, such as taking online surveys, selling stuff you don't need or getting a side job. Then, stash that extra cash in a savings account for holiday spending.
November: Check up on your benefits
If your employer offers workplace benefits, you typically have an opportunity to sign up for those benefits or make changes to the ones you're receiving during open enrollment in November. Take this opportunity to make sure you're getting the most out of your benefits.
For example, there might be a more affordable health insurance option now available. Make sure you're contributing enough to your 401k to get your employer's full matching contribution, if it offers one. And check if you're eligible for low-cost disability coverage through work to replace your income if an injury or illness leaves you unable to work.
December: Increase retirement savings
If you get a raise or a year-end bonus, make the most of it. "As opposed to just taking it all, increase your retirement contributions by 1 percent to 2 percent," Haynes said. "If you received a 3 percent increase, then your take-home pay will still increase."
If you do this every year, you'll likely be contributing the maximum allowed to your retirement plan in five to 10 years, he said. "And best of all, you really won't even notice since you did it in such small incremental steps over the years," Haynes said.
Resources for your month-by-month financial plan
There are plenty of resources and tools that can help you stick to your 2018 financial plan.
An app such as Digit can help you build savings because it calculates how much you can afford to set aside each month and automatically saves it for you. Or, look for a high-interest savings account -- such as ones offered by Ally Bank and Synchrony Bank -- to stash your emergency fund money.
To take control of your finances, consider using one of the many budgeting apps, such as Mint, Personal Capital and Goodbudget. You can prepare your own tax return with the help of tax software and services, such as TurboTax and TaxAct. Make money on spring cleaning by taking advantage of apps such as OfferUp to sell your stuff to local buyers or Poshmark to sell clothing.
And, earn extra cash for the holidays or at any time of year by taking online surveys at sites such as Swagbucks and InboxDollars, cashing in unwanted gift cards at Cardpool or selling unwanted electronics on Gazelle or uSell.
Put your plan in action
Breaking up financial tasks and tackling one each month can make them more manageable. To ensure you follow through, set up reminders on your mobile device or mark your calendar so you won't forget which task to focus on each month.
Or, simply make a list of what to do each month, hang it up and mark off each task as you go to track your progress. If you follow each step, you'll likely find that you're better off financially by the end of the year.