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. 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 the perfect time to get on the path toward financial wellness. These simple yet effective money habits can be started today to make the most of your money in the new year — and beyond.

1. Save first, spend second

When payday rolls around, it can be tempting to treat yourself after you've finished paying your bills. Before you start spending, prioritize saving by transferring funds to your savings accounts, and making sure you have enough set aside for emergencies. Whatever remains is for spending. This works best if you have a budget with monthly savings goals. Make saving effortless by setting up direct deposit to your checking account, and automatic deductions from your paycheck into your savings account.

2. Track spending habits

Logging all of your expenses and purchases can help you see where every dollar is going. Do you buy coffee every morning? Log it. How about your weekly tank of gas? Log it. It’s not about cutting coffee — it’s about clarity. Some impulse purchases that you shrug off on a regular basis might be having a bigger impact on your bottom line than you think.

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

3. Use credit cards responsibly

Using a credit card is convenient and can help build credit if used responsibly. But because it’s easy to swipe without seeing money leave your hands, overspending is a risk. A high credit card bill can throw off your budget and reduce what you save. For example, if you normally save $500 a month but your bill is $200 higher, you’ll only save $300. If you can’t pay the full balance, interest charges can add up, limiting your cash flow now and possibly in the future. To keep your finances on track, make responsible credit habits part of your financial wellness routine.

4. Don’t put off retirement savings

Retirement might be decades away but that doesn't mean you should be ignoring it altogether. 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.

5. Contribute to your savings goals

Having savings goals is important and can help you feel more motivated to save when it’s going towards something as opposed to just sitting in your savings. You can set aside money for things like a holiday fund, vacation fund, a new car fund or an emergency fund.

Pro tip: Set up automatic transfers from your checking to your savings so these goals are contributed to automatically.

6. Live within your means

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.

7. Consistently reevaluate your plan

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? 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.

Ready to tackle your financial goals?

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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