7 financial habits to set your new year up for success

Kicking off a new year is a tremendous opportunity to make positive changes in your life and develop new financial habits. No one is perfect, that’s what makes us human, and we all have a few areas where we can make changes that help us be the people we want to be.

For a lot of us, that means taking a hard look at our finances.

You don’t need to wait for a raise or winning lottery ticket to get on the path toward financial success. These simple yet effective money habits can be implemented today to make the most of your money in the new year — and beyond.

This is a staple of most financially savvy people. Sure, you might be able to afford a more expensive and lavish apartment, or ditch your old car for an upgrade. But it isn’t a question of if you can afford it or not — but rather, should you take on that living expense? Doing so might hinder your ability to save for other things, like buying a house instead of continuing to rent, or contributing more toward your retirement fund.

Some people take it a step further and live slightly below their means to better control their expenses and bottom line. The important thing is to avoid stretching yourself to the point where you’re jeopardizing your ability to reach other financial goals.

When payday rolls around, there can be a temptation to treat yourself after you’ve finished paying your bills. Before you get spend-happy, transfer the appropriate funds to your savings accounts; whatever you have left is for spending. This is especially effective if you have a budget that provides a savings target each month. You could even take the thinking out of this financial habit by setting up automatic deductions from your paycheck.

Bonus tip: leverage financial tools, like Citizens Savings Tracker™¹, to help automate your savings so you can stay on top of your goals.

By prioritizing saving over spending, you won’t feel guilty about treating yourself to new clothes or a fancy dinner out with friends. If you have the funds, you can have the fun.

Log all of your expenses and purchases so you know where every dollar is going. Do you buy coffee every morning? Log it. How about your weekly tank of gas? Log it. Some impulse purchases that you shrug off on a regular basis might be having a bigger impact on your bottom line than you think. As Benjamin Franklin once famously said, “Watch the pennies, and the dollars will take care of themselves.”

There are online and mobile tools that allow you to sync your transactions or record them manually, serving up a spending summary that’s easy to digest and will help you see where you’re spending those pennies.

Making transactions on your credit card is convenient and gives you the opportunity to build credit. That’s if you use the credit responsibly. That said, since it’s so easy to swipe a credit card, we don’t see the money physically leaving our possession, leaving open the possibility that you charge in excess. This can cause you to steer off the course of your budget if you run up too high of a credit card bill. Paying off those high bills has implications on your savings potential. Let’s say you typically save $500 each month. However, this month your credit card bill was $200 higher than you’re used to, forcing you to only save $300 that month.

If you’re unable to fully pay off your credit card balance, interest rates kick in, and paying back your balance with interest may hamstring cash flow in the present and — depending on the severity — the future.

Sure, retirement might be decades away and the least of your worries right now, but that doesn’t mean you should be ignoring it altogether. In fact, 21% of Americans regret not starting earlier to save for retirement. Contributing to your retirement account early on is extremely beneficial because it allows your funds to get the most out of compound interest.

You might be saying, “I know I should be saving for retirement, but there’s no room in the budget for that. I’ll be able to afford that later in life.” This thinking can get you into trouble. Waiting too long can hinder your ability to retire by a certain age or with a certain lifestyle. While you may have plenty of funds to contribute to your retirement later on, you risk playing a game of catch-up the rest of your working years.

Plus, by the time you tell yourself you have enough money to contribute to retirement, there could be other expenses that come up, such as a mortgage, starting a family, and planning for your kids’ education. If you wait for the “right time,” you might be waiting longer than you think.

Do you have one general savings account where you contribute all of your savings? That’s good, but is that the best way to reach multiple financial goals? Not necessarily.

Having a lump “savings” amount can be tough to equate and organize. That’s why it’s helpful to separate your savings into goal-specific accounts. This practice allows you to monitor your progress for each goal and make any necessary adjustments to help you reach those short-term and long-term goals.

For example, you could have one account be your emergency fund for unexpected expenses, another specific to the tropical vacation you hope to take in a few months, and a final one for a down payment on a house. If you see that you’re drastically behind on saving for the vacation you want to take in two months, you’ll be able to easily spot that and revisit your saving strategy to ramp up your contributions.

Implementing any of the above six items will help you get your new year off on the right foot. However, even the best financial plans should be reevaluated on a regular basis.

What sort of improvements are you noticing? Are there any areas where you’re coming up short? Don’t be afraid to go “under the hood” after a few months to evaluate where you’re succeeding and where you need to devote some extra attention. Also, don’t be afraid to seek out help. A financial professional can often give you additional tactics and planning to help you reach your financial potential.

And when you achieve, give yourself some credit! You recognized you struggled with managing your money and are doing something about it. These changes — regardless of how big or small — can be felt today and for years to come.

Wherever you are in your financial journey, Citizens is here to help – with banking that stands with you and grows with you. With automatic transfers from your checking to your savings account, you can set money aside and watch your savings add up.

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