New Year's Day marks the end of the festive holiday season and the beginning of a long, dark winter, during which many of us only have belt tightening and holiday debt to look forward to for months to come. But the new year also gives you the perfect excuse to tackle self-improvement projects you put off during the last few months, and while losing weight or taking up crocheting is great, there's no better resolution to make than to improve your personal finances.
Committing yourself to getting your finances in order may seem like a daunting task. And it is—at least to set good habits in motion. But the advice from financial advisers and experts we spoke to help paint the broad strokes of what you should concentrate on, no matter your age or financial outlook.
If you're 18 …
If you're in the last years of being a teenager, the best gift you can give yourself is getting into the habit of building a budget. The earlier you start, the more benefits you'll reap throughout your lifetime in the form of smarter spending decisions and less unnecessary debt that can delay or even prevent milestones, such as owning a home or starting a family.
This is especially true if you're planning on heading to college, where many young people take on significant financial obligations for the first time in their lives. "The goal is to truly understand what kind of financial aid you're getting yourself into," said Joy Liu, a financial trainer with The Financial Gym. "Figure out how much tuition will cost and how much you'll need for lifestyle expenses and room and board." Then Liu recommends you borrow that exact amount so you can get your diploma with as little student loan debt as possible.
One way to cut down on some of those lifestyle expenses as an 18-year-old? "Learn to cook!" said Steven Briggs, a registered investment adviser and founder of Briggs Financial. "Not only does it make you a great date in college, but so much money is wasted on fast food in college."
If you're 25…
Hopefully by now, you have a foothold on the bottom rung of a career ladder, an accomplishment that's becoming rarer in the age of the gig economy. If so, you need to start taking advantage of whatever retirement plan is available through work. "If your employer offers a Roth option, you should consider this," said Jeff Burke, a financial planner at 7th Street Financial. "You will most likely be in a lower tax bracket, so investing post-tax dollars is not as painful." You should always invest at least as much as your employer is willing to match—otherwise, you are leaving money on the table and out of your eventual retirement fund. And if you're a freelance worker or work at a job where you don't get retirement benefits, that doesn't mean you can't resolve to take some concrete action toward securing your golden years in 2019. "If you are in a gig economy, look to open a solo 401(k), SEP-IRA or a standard IRA," said Burke.
If you're 35 …
You've most likely entered the peak earning years of your career, but you also have more financial obligations than ever, especially if you've settled down and started a family. Juggling all of your professional and personal responsibilities isn't easy, which is why you should automate your savings if you haven't already. "Review your savings and schedule regular, automatic deposits into your accounts," said Rick Vazza, president of Driven Wealth Management. "With so much going on in your life, having an automated system will ensure you reach your financial goals while you can focus on the aspects of life you enjoy the most."
This year's also an excellent time to put your affairs in order and come up with a financial plan for what happens if you're no longer around to support your loved ones (see your options on how to write a will here). Make sure your life insurance beneficiaries are all up-to-date (and if you don't have it, the experts we spoke to recommend getting life insurance for the sake of those depending on you), and determine who gets power of attorney if you're legally disabled.
If you're 55 …
The once-distant goal of retirement is now right around the corner, so make it a point this year to set up an appointment with the Social Security Administration to get a clear sense of what you're entitled to and how that factors into your retirement plan. "Put pen to paper and answer questions such as, 'Am I going to downsize?' and 'Is my mortgage paid off?'" said Liu. If you have any 401(k) accounts from previous jobs that you've lost track of over the years, now is the year to find them and make sure you get the money you saved.
And just because the finish line is in sight doesn't mean you should slow down your retirement savings. "Make it a priority to look at how much you are contributing, and try to increase it by 3% to 5% this year," said Briggs. "Making that adjustment might require a few lifestyle sacrifices short-term, but the long-term benefits of saving that money and the long-term growth benefits it can have will vastly outweigh the lifestyle sacrifice now."