2018 is almost here. Are you ready?

Remember the Boy Scout motto: Be prepared! A brand-new year, always ripe with resolutions, is the perfect time to reassess your financial attitude, improve, and vow to do more.

“It’s a time of planning for going forward,” shares Sallie Krawcheck, co-founder of Ellevest. “We see a lot of people, often over the Christmas holiday, but certainly in the new year, taking stock of where they are on their personal finances and investments.”

Have you taken any steps to prepare for the financial realities of the coming year?

Here are some tips to get you started.

Tune your budget

It’s a great idea to begin the new year with a plan. A budget is just that-a plan that starts with the income you expect, along with your fixed expenses, such as rent or mortgage costs, homeowners association fees, insurance, utilities and transportation costs. The plan also incorporates your savings goals.

Then, the money remaining is designated for your other expenses. A realistic budget will help you set your financial goals and remind you to stick to them. These last few days in December, as the year draws to a close, is the perfect time to assess last year’s budget or to create a new one if you don’t yet have one in place.

Reviewing where you spent last year’s money will help you make better choices in 2018. If you did not save money for retirement, for example, this can be a new budget item.

While planning for the coming year, make sure to include a method for tracking your spending. You can do this on a spreadsheet or you can simply tag items in your financial account.

Even with a solid strategy in place, there will always be surprises along the way. Losing a job, a leaking roof or an illness can throw off your entire plan. Be sure to build an emergency fund into your budget.

Plan ahead to meet your goals

Next, consider how you will accomplish your goals. You’ll have short-term goals, such as purchasing a new car or home, as well as long-term goals, such as saving for retirement. Each set of goals requires a different kind of planning and saving.

Financial planner, Rachel Rabinovich, recommends setting up a separate savings account for each goal. This way, you can easily track your progress.

Experts suggest working backwards to determine how much you need to save for a specific goal. For instance, if you dream of taking an expensive vacation two years from now, determine the total cost of the vacation and then establish a reasonable time-frame and the amount you’ll need to save each month to reach that goal. Make sure the amount you plan on setting aside each month is doable, or you may just have to move your goal over by six months or more.

Spend mindfully

You can also make your financial future more secure by identifying the difference between your needs and wants. Needs are necessary for your survival, and include items like food and shelter. Wants are things that are not necessary but you would like-such as a luxury car or European vacation.

First, tend to your needs. Then, based on what’s left to work with, consider your wants. This might sound obvious, but for many of us, the line between wants and needs is often blurred. This can lead to awfully tight financial situations, even prompting us to “borrow from Peter to pay Paul.” By clearly differentiating between what you want and what you need, you can avoid this outcome in 2018.

Maximize retirement contributions

Retirement plan contributions can be a valuable source of savings, especially if you have the option of employer-matched funds. If you do, be sure to take advantage of them!

Also, check with your HR contact and your accountant to make sure you are contributing the optimal amount to your 401K and IRA. For the coming year, you can contribute $5,500 to a Roth or traditional IRA, or $6,500 if you are making “catch-up” contributions.

Check your flexible savings account (FSA)

If you have unspent money in your FSA, now is the time to use it. These pre-tax dollars often have to be spent before the end of the year. Do you need a new pair of eyeglasses? Are your teeth in desperate need of a cleaning or repair? This might be a good time to spend that money on self-care and other needs you’ve been pushing off. You don’t want to lose this money, so be sure to use it if you can.

Put the brakes on holiday spending

Avoid going overboard on your holiday spending. Think three times before you pull out your credit card. Going over budget now can mean spending the first few months of 2018 playing catch-up with your credit card bills. Spend less, and start the year off with a clean slate!

Your Turn: What are some of the things you’re doing to prepare for 2018? Share them with us in the comments!

SOURCES:
https://www.cnbc.com/2017/11/20/ceo-sallie-krawcheck-3-ways-to-get-your-finances-in-order-before-2018.html
https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/2017-12-11/5-steps-to-building-your-2018-budget 
https://www.investopedia.com/articles/personal-finance/111813/five-rules-improve-your-financial-health.asp 
https://www.forbes.com/sites/markavallone/2017/10/01/10-quick-year-end-financial-planning-tips/#205a7f9b3a59 
https://www.cnbc.com/2017/11/20/ceo-sallie-krawcheck-3-ways-to-get-your-finances-in-order-before-2018.html