New year. New you. No matter how well things have been going, there is always room for improvement. And if you’re like most people, the start of this decade marks a great time to re-evaluate all aspects of your life, including finances.
Really, everyone — and especially the increasing number of South Asian women who find themselves as the household chief financial officer — should be looking to make strides when it comes to financial literacy. While South Asian women have a positive money mindset–they tend to make ends meet and save for their own future and for their children–they tend to score low on financial literacy. Who couldn’t get on a better budget, increase their savings, and start making some savvy investments?
Here are some easy ways to make quick progress. Start with a positive mindset–money management is achievable!–and then work at building the discipline to stick to a plan. Anyone can make some headway by committing to the following five financial wellness New Year’s resolutions.
1. Set Up Automatic Savings
Some people have a natural disposition to squirrel money away, but most of us struggle. That’s why the best way to increase you savings is to set it and forget it. Force your checking account to automatically move 5 percent (or as much as you can afford) of all payments you receive into a savings account.
Rather than having to remember to do it manually each time, your savings will naturally accumulate over time. Otherwise, it may be too easy to spend every last penny. And that’s no way to live. By establishing and continually building a cushion, you are prepared for any emergencies. Ideally, you should have six months of living expenses saved. Getting to that point may take awhile for some people, but if you start small and put it on automatic, you will get there.
2. Cut Costs Where You Can this New Year
Most of us accumulate a range of living expenses, and each year, you will probably add a few more. Some can be big (car payments and tuition), some are recurring but minor (Netflix subscriptions and gym memberships), and others are habitual (Starbucks and shopping for new clothes). If you haven’t been paying attention, you may have picked up a lot of the minor and habitual expenses during the last decade.
Well, it’s time to clean house. Look back at what you spent money on in 2019. Hopefully, you have a formal budget and this is easy. (If not, create one immediately here https://www.moneyunder30.com/free-budget-spreadsheet. That’s another big step in improving your financial literacy.) Examine what is and is not necessary. This doesn’t mean you can’t still have a cappuccino in the morning, but you do need to be aware of it and adjust your spending elsewhere. If you don’t actually go to the gym, stop paying for it! You don’t have to make cuts brutally unless things are very tight. But definitely get rid of the stuff that isn’t essential to you. You can certainly put that money to better use.
3. Make Progress by Paying Off Small Debts
How many different debts do you currently have? Chances are, there are several. While a home mortgage, student loan, or car loan might be the biggest, most people have several smaller financial burdens as well. One great way to make some progress — both financially and psychologically — is to pay off a few of the smallest debts as quickly as possible. Personal finance guru Dave Ramsey calls this the “Debt Snowball” method, and it really can help provide some fast peace of mind.
Even if you still have some very large outstanding debts, they will start to seem more manageable if the volume of different debts is reduced. Especially if you have $200 on phone installment plan or a $1,000 on a credit card, get those taken care of! Then you can breathe easier. You will know exactly what’s left, and then you can start strategically planning how to pay it off rather than feeling overwhelmed by owning money all over town.