Money Moves You Should Make Every January 1st

Money

January 1st of every year is a great place to start taking a long, hard look at your financial picture and seeing where you want to go over the next 12 months. Some people ask what is the big deal about January 1st. Why not do it anytime during the month of January?

Here’s why.

1. It is a Federal holiday, so 99% of people have the day off. Even if you stay up into the wee hours of the morning celebrating and don’t wake up until 11 a.m., you still have half the day to find a few hours to take a close look at your finances.

2. The holiday season is over. There is only one holiday after New Year’s Day, and chances are you will need it as a rest stop to get back into a more normal working mode and lifestyle. This year especially, when Christmas and New Year gave us back-to-back 3 day weekends, you will find you need the time for other things.

3. All your credit cards should be stabilized and you have a better idea on how your Christmas spending impacted your monthly payments. It’s great if you used cash for all your purchases, but even that choice still means the money had to come from somewhere and needs to be replenished. January 1st lets you see the big picture.

Here’s a basic plan.

  1. Get your tax receipts and information together, organizing it to make it easy for you and the tax man or financial planner to understand. You may not have your 1099, W2, or other employment income documents yet, but you can use your last pay stub to come very close to the amount you made, taxes paid in, etc. This will also help you avoid mixing 2017 tax year paperwork with stuff you won’t have to deal with for another year.
  2. After organizing, draw up a big picture of where you are financially – and where you want to be at the end of the year. This plan does not need to be perfect or rigid. It’s intended to be a basic roadmap you can follow for the rest of the year. You will likely change it as they year goes on, but every roadmap needs a traveling starting point. January 1st is yours. Consider these 3 major end points of the journey: how much you want to save, how much you want to put aside for retirement, and where you can possibly cut expenses to help your savings and retirement goals along.
  3. Become familiar with the new tax changes. 2017 is much different than past years because of the many changes that will directly affect your 2018 tax bill. You don’t need to be an accountant or financial planner and know all the details. It will simply frustrate you. But you can have a broad idea of the coming changes and write down a list of questions to ask, if needed. Prepare yourself now so when the 2018 tax forms are available from the IRS you can choose another day and do a rough estimate of your 2018 tax bill. It is likely you won’t make the time to do all this until the end of 2018, when the holiday chaos returns.

Now move the money to where it will best serve you.

  1. Review the APRs on all your credit cards and shift the debt from higher APR cards to lower APR cards if possible. A savings of 1% per year can add up to hundreds of dollars. January 1st is the best day because it will maximize your interest savings for the year and you likely won’t get around to it later in the year.
  2. If you don’t have a budget, create one. If you don’t have an emergency fund, plan one. These two money moves go together because the money for your emergency fund will come from your budget. If you look forward and make regular deposits into your emergency fund you have the option to put it in your budget as a monthly expense. Most people without budgets are also without emergency funds.
  3. Check your savings accounts and see if you can move overflow into a financial instrument that will pay you a higher rate. Like your credit cards, locking up extra money for a 6 or 12 month terms has the potential to earn you several hundred dollars over the year. Even if it may be only $5, if you saw a $5 bill laying on the ground, would you pick it up? Don’t leave money laying around.
  4. Check your credit report for errors and your credit score to see if they are in line with your current financial situation. This is a “hidden” money move because any errors that are present have the potential to lower your APR – and save you money every month. An error on your credit report will reduce your credit score, and that means you are likely to be paying a higher percent of interest on credit cards, cars loans, and other debt. If you find errors report them immediately. It generally takes 60 days for any changes on your credit report or credit score to appear on credit reporting systems. The sooner you do it, the sooner you can see if there is a significant change that can form the basis to request a lower APR.

Finally, though some of these money moves may not seem to have a major impact on your overall financial picture, remember that wealth building is a matter of starting small and being consistent. Finding $100 a month to start an emergency fund gives you $1200 at the end of the year. That may be one mortgage payment and a month of food, but that is a better position to be in than scrambling around with nothing in the bank when the emergency crashes through your door. And for January 1, 2019 you can relax a bit knowing you have a $1200 start.


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Dr. Deborah Birx
10 Things You Didn’t Know About Deborah Birx
Shakespeare
20 Shakespeare Quotes that Apply to Business
Bill de Blasio
10 Things You Didn’t Know About Bill de Blasio
JB Pritzker
10 Things You Didn’t Know About JB Pritizker
American Airlines
Is American Airlines Stock A Solid Long Term Investment?
stocks
Is Fabrinet a Solid Long Term Investment?
Stocks
Is Antero Resources Stock a Solid Long Term Investment?
Chase
How to Prequalify For Chase Credit Cards
Unicoi State Park
The 20 Best Things to Do in Helen, GA, for First Timers
St. Mark’s National Wildlife Refuge
20 Best Things to Do in Tallahassee for First Timers
Glenbow Museum
20 Things to Do in Calgary for First-Timers
Little Nonna's
The 10 Best Italian Restaurants in Philadelphia
Volvo's Polestar
Volvo’s Polestar May Be the Four-Door Electric Car of the Future
2021 Genesis GV80
10 Things You Didn’t Know About the 2021 Genesis GV80
2021 Hyundai Elantra 2
10 Things You Didn’t Know About the 2021 Hyundai Elantra
2020 Audi Q5 Hybrid
The 10 Most Efficient Small Hybrid SUVs
10 Things You Didn’t Know about Moller Watches
The Iconic No. 1 by TID
The 20 Best Minimalist Watches for Men
Brew Watches
10 Things You Did Not Know About Brew Watches
Phoibos Ocean Master PY005B 1000M Automatic Diver Watch
The 10 Best Phoibos Watches Money Can Buy
Jake Tapper
How Jake Tapper Achieved a Net Worth of $10 Million
Jared Padalecki
How Jared Padalecki Achieved A Net Worth Of $12 Million
Tati Westbrook
How Tati Westbrook Achieved A Net Worth Of $6 Million
Gwyneth Paltrow
How Gwyneth Paltrow Achieved a Net Worth of $100 Million