5 Smart Financial Moves to Kick Off the New Year

As we all eagerly await the start of 2018, many of us are resolving to do better financially. If your goal is to improve your financial outlook going forward, here are a few moves to make once the new year begins.

1. Create or revisit your budget

Despite the fact that budgeting is one of the most effective money management tools out there, the majority of Americans don't follow one. If you've yet to use a budget, then the first thing you should do once the new year kicks off is sit down and create one. To do so, simply list your recurring expenses, factor in one-time expenses that pop up throughout the year, and compare those bills to what you bring home in your paychecks. If your total spending doesn't leave you with much wiggle room for savings, it's time to make some lifestyle changes that free up more cash.

Similarly, if you technically have a budget, albeit one that's out of date, then spend some time reworking those numbers to ensure that they accurately reflect your living costs. It could be that you've moved since creating your last budget, or that you've gotten a new car with a higher monthly payment. Or it could be that your income has gone up or down while everything else has stayed the same. No matter the details, review your budget and tweak it as necessary. Otherwise, it won't end up doing you much good.

2. Establish or complete your emergency fund

It's an oft-bemoaned fact that the typical American is ill equipped to handle even a moderate financial emergency. If your savings account leaves much to be desired, then now's the time to work on boosting your cash reserves so you're not left in the lurch when an unplanned expense falls in your lap.

Ideally, your emergency fund should contain enough cash to cover a full three months' worth of living expenses at a minimum. But some people need more than that to be truly financially secure. For example, if your income is variable, or if you're the sole income earner in a household with multiple dependents, then it pays to aim to accumulate enough cash to cover six months of living costs.

Where will the money for your emergency fund come from? You may need to cut some nonessential expenses or work a side job to drum up extra cash. But the sooner you start building that safety net, the better protected you'll be.

3. Boost your retirement plan contributions

It's a frightening statistic that nearly half of Americans have no money set aside for retirement. If you're one of them, then make 2018 the year you start building a nest egg. Currently, you're allowed to contribute up to $18,500 annually to a 401(k) if you're under 50. If you're 50 or older, this limit increases to a generous $24,500.

Don't have access to a 401(k)? You can still build some savings in an IRA. Whether you're opening a traditional or Roth-style account, you can put in up to $5,500 a year if you're under 50 or $6,500 a year if you're 50 or older. Max out either option for several decades, and you'll be sitting on a respectable amount of cash by the time retirement rolls around.

4. Get out of debt

Earlier this year, credit card debt reached an all-time high in the U.S. And that's not a trend you want to be a part of. If you're carrying a costly balance, then the start of the year is a good time to devise a rapid repayment plan. This could mean cutting expenses and using your associated savings to pay down your debt, or working a secondary gig to do the same. It could also mean being strategic about your debt -- for example, looking into balance transfer options that make it easier and more cost-effective to pay off what you owe. Remember, the sooner you eliminate your debt, the less money you'll end up throwing away on interest -- and that's money that can serve a much better purpose.

5. Map out your financial goals for the year

Maybe you're hoping to put a down payment on a house sometime this year, or upgrade your computer equipment at home. No matter what financial objectives you have for 2018, now's a good time to figure out how much cash you'll need to get there and develop an associated savings plan.

For example, if you're $6,000 away from buying a home and you figure that out early enough in the year, you'll know to set aside $500 per month to reach that goal by December. Mapping out your goals will not only keep you on track, but help you stay motivated and avoid throwing money away on less important things -- so put those objectives in writing and commit to making them happen.

The start of a new year is the perfect time to get your finances in order. If you make these key moves, you'll set the stage for a successful 2018.

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