Seven Smart Money Moves You Can Make This Year

Seven Smart Money Moves You Can Make This Year
Theodora Lee Joseph, CFA

about 1 month ago2 mins

Sure it’s mid-January, but it’s never too late to make a New Year’s resolution about personal finance. So if you want to really grab control of your finances and take better care of future you, here are seven tips that can help:

Get familiar with the 50/30/20 rule. This is a great place to start. It’s simple: use 50% of your income for essentials like rent and bills, 30% for fun stuff like dining out, and save the remaining 20% for savings and debt. It’s an easy, flexible way to balance necessities, leisure, and savings.

Reduce debts. A smart move is to clear your debts before you start investing. It’ll cut down on costly interest payments, particularly now, with rates a lot higher than they used to be. Plus, this move frees up your cash for savings. If it’s going to take a while to pay off all your loans, think about refinancing to get lower interest rates wherever you can.

Automate your savings and investments. Regular monthly contributions are a smooth and effective way to grow your wealth over time. Investing a little bit consistently, especially if you’re worried about economic ups and downs, can be a smart way to handle uncertainty in the coming year.

Maximize your tax allowances. Depending on where you live, you might have access to various tax breaks. These could include making tax-deductible contributions to your retirement or health savings account, or even some tax-free investing options. Taking advantage of these allowances can supercharge your long-term returns.

Top up your retirement savings. In investing, long-term thinking pays off – and that means topping up your retirement savings whenever you can. In certain countries, you can earn income tax relief on the money you set aside. To get started, you might consider low-cost target date funds that help you invest across stocks and bonds, based on your target retirement age.

Reinvest dividends. Those little payments may seem small, but reinvesting them can result in a substantial boost to your overall returns. That’s because your returns will also earn returns – with the magic of compounding. When you’re investing, consider “accumulating” ETFs or funds. These automatically put your dividends back into the fund, unlike “distributing” ones.

Make the most of cash-back and reward schemes. Whether in investing or shopping, it’s worth keeping an eye out for a good deal. After all, as Ben Franklin said, “a penny saved is a penny earned”. Don’t be afraid to take full advantage of cash-back and rewards programs from credit cards or apps. These perks can really accumulate over time, helping to boost your savings and reduce costs.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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