Low-Effort Resolutions That Can Have a Big Impact on Your Money
Looking to slim down, save more, buff up or accomplish any other New Year’s resolutions? You’re not alone. As a new study from The University of Pennsylvania’s Wharton School of Business documents, the “fresh start” effect is real. After a landmark like a holiday, birthday or even, yes, a new year, people were more likely to set off on new quests and strive for success. As for actually keeping those resolutions? Well, a study from the University of Scranton showed that only 8 percent of people are able to do that.
But it doesn’t have to be an either/or, especially when it comes to resolutions involving your money. The key: setting small goals that are as easy to achieve as possible. On that, we’ve got you covered with a series of “low-effort” financial resolutions.
The tasks we’ve laid out should take 30 minutes or less to complete, but they can result in a huge payoff both next year and down the line.
Automate to Save More and to Avoid Fees
Likely the single best task you can do right now for the biggest return on your time and money next year? Put your savings on auto-pilot. If you’re already enrolled in a workplace retirement plan and aren’t maxing out, increase your contribution by at least 1 percent, then set a calendar alert for six months from now to do it again. If you don’t have a workplace plan, set up your own in the form of an IRA or Roth IRA, and automate contributions. Then, establish the same sort of set-it-and-forget-it contributions into health savings accounts, 529 college savings accounts, and plain vanilla savings account for emergencies.
A late or missed payment of any kind can result in added fees and cause unnecessary stress. Some of them can also significantly hurt your credit score (by as much as 88 points, according to TransUnion’s score simulator). So take a few minutes to head to the websites of your utilities, insurance companies, credit card companies, and any other regular billers to set up automatic payments. If you’re worried about cash flow, call and change your monthly bill due dates so they align better with your budget, says Rod Ebrahimi, entrepreneur, and personal credit expert.
Access Other Savings Mindlessly
If you’ve had trouble saving year-in-and-year-out, download Digit. It’s a savings app that analyzes your spending patterns, then quietly socks away small amounts of money it thinks you won’t notice. There’s a monthly fee of $2.99 a month, but the average user saves between $80 and $170 a month. That’s progress.
Take a Safety Break
These days, data breaches are so common that you don’t even hear about all of them. Every day, over 5.1 million data records are stolen, according to the Breach Level Index. Until the government figures out a better way to protect consumers, the best course of action is to take things into your own hands. At least once a year, give your credit reports a once-over—you can download them all for free once a year at AnnualCreditReport.com. Then, set up alerts on all your financial institutions’ websites for whenever an online or phone purchase is made—or whenever daily spending exceeds a certain amount. Finally, consider freezing your credit at all three bureaus (Equifax, Experian, and TransUnion) which will prevent potential new lenders from accessing your credit report and, therefore, opening new accounts in your name. Credit freezes do come with a cost in some states, but in that case, you’ll only be charged when you either freeze or unfreeze your credit.
Lower Your Bills and Interest Rates
Block out 15 minutes on your calendar to call your utility, insurance and credit card companies, and ask for lower interest rates, discounts or limited-time promotions. It’s worth it: A survey by CreditCards.com shows more than eight out of 10 American cardholders who called and asked for a waived annual or late fee, reduced interest rate or higher credit limit were successful. It pays to be nice but firm—and, if you have extra time, do your research on competitors’ rates before calling to really cinch the deal. It’s an especially good idea to call your credit card company to ask for a lower rate if your APR is over 15 percent, says Ebrahimi. For auto insurance, ask about discounts based on your kids (if they’re a good student or away for college) and yourself (if you’re commuting fewer miles this year or have recently taken a defensive driving course).
Stay on Top of Your Taxes
When tax season comes around, it’s often hard to recall any tax-deductible expenses from the beginning of the year. But not keeping track of those job-hunting costs, charitable gifts and other relevant expenses can cost you significant savings later in the form of deductions. A quick two-minute task you can do now that will save you a lot of headaches come tax season? Create a folder in your email or your filing cabinet (depending on how you work best) labeled “Tax Deductions,” says Benjamin Sullivan, a certified financial planner at Palisades Hudson Financial Group. Then, throughout the year, drop in W-2 forms, donation receipts, real estate taxes, retirement account contribution receipts, and other related documents as you receive them. This should save you time and stress come spring.
Resolve to Shop Smarter
Upgrade your shopping experiences next year with tools that will either save you money or give some back. First, make the most of your credit card rewards (which can often be vague or difficult to understand) by downloading an app like Wallaby, which automatically tells you which of your cards will net you the most rewards for any purchase. Next, take a few minutes to sign up for a cash-back portal like Ebates. When you shop online, accessing the stores you frequent through this portal will give you a kickback percentage of what you spend. Finally, take a second to download an online shopping service like Honey, which automatically tries every relevant discount code it can find for you at checkout—and has saved users over $170 million to date, according to app co-founder Ryan Hudson.
Create Your Financial Mantra
Finally, let’s breathe. Research by Sarah Newcomb, a behavioral economist at Morningstar, suggests people who believe they’re in control of their finances manage their money better across the board (cash, credit, savings and the like). The findings seem to be true regardless of income, age, education, and other factors. And if you feel that your financial picture is out of your control? It’s important to take steps to change your thinking. Every morning in the mirror, use an affirmation to make your view of money more positive. Try, “I am in control of my financial destiny,” “My money, my choices” or “I hold the power in my financial life.” Feeling like you own your money is key to making more positive changes throughout this year—and beyond.
With Hayden Field