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How to Start the New Year Off On the Right Financial Foot

  January 5

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How to Start the New Year Off On the Right Financial FootI already talked about my resolutions for this year in my last post (thanks, by the way, for all the supportive comments on that one!) But, I do want to talk more about getting on the right financial foot this year. The way to do that is, of course, to get organized.

Even though I’m going to turn 29 this year and I’m married with two kids, I still feel like I am learning about adult-ing. There have been a couple of things I’ve needed to get done in the past when it came to my finances, and I’m doing it now.

Adult-ing

Last year, we started working with a financial planner who is helping us turn into real, legitimate adults, adults who have all the right levels of insurance coverage as well as all the right types of insurance too.

We’re also creating a will and making sure we document what we want for our kids should something happen to us. You know, we’re checking off all those financial boxes that we should have been checking off all along. I know many of you can relate.

Saving

After having to dip into our emergency fund last year after back to back thousand dollar car repairs, we’ve re-filled our emergency fund to the $6,000 mark. It’s just one month of expenses for us, but we add to it when we can. This, more than anything, will help you start the year on the right financial foot.

An emergency fund breaks the cycle of debt for many people because you can use the extra funds to repair your hot water heater, replace a tire, or pay a medical bill you didn’t expect. If you’ve never had an emergency fund before, you’re going to love the feeling of security it brings you. Start today by putting $50 or $100 in a separate account that’s hard to reach (I use SmartyPig) and only use it when a true emergency arises.

Investing

If you just made a loud groan when you read the word “investing,” I hear ya. I used to be afraid of the investing word too, but the more I read about it, the more I understood it. Make this the year you finally figure out what a mutual fund is. Sit down and open up that Roth IRA you’ve been meaning to fund. Ask for help. Become educated when it comes to money. Spend your valuable time stretching yourself and learning something new (and then reward yourself by watching an episode of The Bachelor – holla!)

If you don’t know where to start, my friend Brittney Castro actually offers a money class through her company Financially Wise Women. Brittney is a super successful certified financial planner who happens to be a young, fun, woman so she can relate to the millennial generation really well. After all, it’s hard to figure out the stock section of the newspaper if you have no background in it. Might as well make learning about money fun. 2016 should be your year to do just that.

Ultimately, if you spend time this year getting your financial paperwork in order by finally creating an estate plan, stocking up your emergency fund, and learning a thing or two about investing you’ll not only start the year off on the right financial foot, but you’ll be set for a lifelong habit of good money choices as well.

How are you starting the new year on the right financial foot?

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24 responses to “How to Start the New Year Off On the Right Financial Foot

  1. I use to not like to look at my investments also, I just put money in there and that is about it. But I am starting a new retirement plan soon and I look into aggressively investing wisely! It’s easy to set and forget about the money you don’t see everyday.

    1. Set it and forget it is actually good for your investment accounts to a point. What I mean is, you shouldn’t check it everyday like you do with your checking account and other financial accounts. But on the other hand you can’t forget to check it occasionally to make sure it’s working for you and that your investments still make sense.

  2. The way to being financially stable is to save and invest. They go hand in hand which helps you become smarter and practical when it comes to handling your finances.

  3. We spent some time creating our annual budget since the turn of the new year. It’s much less about what we’ll spend on groceries or gas than these big-picture goals like how much to invest and put toward early debt pay-off. The New Year is a great time to get these goals in focus!

    1. I’m glad you didn’t get hung up on the little details. While the details do matter, the big picture of your financial focus for the year is much more important. 🙂

  4. Great job, Cat! We did a will a few years ago and I almost didn’t realize how important it was. We have two kids so the financial side of things is easy (split 50/50), but a will lets us decide who will raise our kids if we die. Important stuff, and I wouldn’t want anyone else making that decision!

    1. Definitely! The beans are the most important things in our lives and have really been the driving factor behind a lot of our “adult-ing” decisions since they’ve been around.

  5. We’ve taken care of the will and life insurance (although, I think it’s time to increase the amounts). Now we just need to work with a planner and definitely look into investing outside of our work related 401k and pensions.

  6. Ah, adult-ing. At age 37, I still cringe at the thought. Despite our income going down (sorta), I need to figure out a way to add to our retirement savings. I still have no idea how, exactly. Maybe I’ll just save as much as possible for now and take some out at the end of the year. Because we’ll have managed to save a bunch of money anyway, right? Right?

    Sounds like you guys are on the right track. I’m going to apply for AAA life insurance, since a form came in the mail to see if I can lower my rate. Thanks to health problems, I pay $50 a month for $125k on a 30-year. Now that Tim hasn’t been a smoker for a year, I might look into coverage for him too.

  7. Nice work “adulting”. It seems that insurance always seems to be one of the last thing most of us address. It’s never critical… until it’s critical. I recently revisited our life insurance policies and I’m glad I did. There’s something about the peace of mind knowing that all will be taken care of if the worst were to happen.

  8. My emergency fund is so worth all the bother of building it up. I’m aiming to get it to $10,000 overall and hoping to put another $1,000 towards that this year. I’m getting pretty close. The peace of mind it provides is kind of incredible.

  9. Adult-ing seems a good idea, Cath, because I plan on my own, but I am considering getting help from a financial planner. This year is the time for me to invest. I hope I could manage to learn how this works.

  10. Great advice Cat. So important to keep it balanced. We are working on 1099s while watching the Golden Globes. Is that adult-ness? Not sure. 🙂

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