The year is not yet over, but many of us are looking forward to January 2018. Starting a new year is always exciting, offering opportunities for making healthy changes. But often, our best intentions have faded within a few weeks, and we fall back into our old routines.
Let’s focus on our mindset to improve our finances in the new year. Maybe your mindset is that you cannot improve your finances because you’ve never been good with money.
We have all fallen short on goals for many reasons. Maybe the goals were unrealistic or we didn’t prepare properly. Sometimes life gets in the way. Brian Grasso, author of the book “Mindset Matters Most,” says, “Changing your mindset is about consistency plus simplicity.”
Today we will look at four ways of changing your mindset involving your finances.
Start a retirement fund
If you struggle to get to the end of the month, and there is never any money left over to save, cut yourself some slack. Chances are, you never had role models (parents or grandparents) when you were a child who taught you how to save. So, you need to learn now.
Ask whether your employer has a retirement plan, such as a 401(k) or a 403(b). If it does, fill out the necessary paperwork and start contributing to it – at least as much as your employer will match. Many employers will annually contribute 3 percent times the amount of your salary if you contribute 6 percent of your salary. Never pass up the match that an employer will contribute.
If your employer offers a Roth 401(k) or a Roth 403(b), choose that option, rather than the traditional retirement plan. You will not receive a tax break in the years you contribute, but the account will be tax-free for future years, including when you decide to withdraw the money.
Retirement plans such as 401(k)s, 403(b)s, Roth 401(k)s and Roth 403(b)s do not have income limitations, but they have contribution maximums. For 2018, a person can contribute up to $18,500 if under age 50 and up to $24,500 if age 50 or over.
Create an emergency fund
Do you have an emergency fund that would cover six months of living expenses in case of an emergency? If you do not, start building your emergency fund.
Open a savings account at a bank or credit union, and make sure you are not paying any fees. If you already have a checking account, open the savings account at the same firm.