If you are looking for action items to set yourself up for a strong year ahead and boost your financial health, today’s podcast episode is the perfect place to start. I will share 15 different actions you can take while you’re lounging at home in that quiet time between the holidays and the day you flip the calendar to January.
Let this episode motivate and inspire you while you have a little extra time open in your schedule. It’s the perfect time for reflection and brainstorming for the year ahead. Use these ideas to elicit creativity and curiosity around money and improve your financial health. These action items refer to personal finances, but it’s important to remember that your personal and business finances are linked.
My Financial Background and Biases
First, I want to remind you that there is a lot of personal finance information online today. It’s not always applicable to you, and it’s not always accurate. I think there is a difference between personal finance for non-business owners and personal finance for business owners.
It’s also crucial that you have a little knowledge of my biases before I get started. I’m married and live in a dual-income household. We have two children. I live in New York, which has a high cost of living. I also come from generations of refugees who have had frugal mindsets.
Our first business failed during the Great Recession, and we went bankrupt. I mention all of this because it’s the lens through which I view finances and opportunities. We learned to learn on a cash-only basis out of necessity after the bankruptcy, which was a challenge. Risk tolerance is another bias. I’m less risk-tolerant than most. I’m good at accepting slower growth and taking moderate risks.
I have both personal and business debt. I’m privileged to have debt for things like owning a home, construction projects, and a car instead of debt to make ends meet. My non-judgment of money comes from my time spent working in corporate America in human resources and all the time I spend talking to people about money.
I think it’s important to remind people where I’m coming from. I’m currently operating from a place where I have more than enough, but I’ve also been in a place where I’ve had trouble making ends meet. I’ve done a lot of work with my relationship with money. I’m qualified to have these conversations, but it’s also important not to compare your situation with mine. You may be facing factors that I’ve never dealt with.
15 Actions to Boost Your Financial Health
Let’s dive into the action times, but before you start, the idea isn’t to do everything on this list. Find one or two things that stand out and feel good, and start there.
1. Come Up With a Mantra or Statement
Come up with a mantra or a statement. Say it, write it, repeat it. This will be an easy lift, especially if you feel a little activated when it comes to money. An example would be, “I will hold compassionate space for myself when I engage in money activities. I am a responsible adult and doing the best I can.” Just give yourself something that you can say to help put yourself at ease.
2. Set an Intention for Your Relationship with Money
Get specific about what you want to accomplish with your relationship with money. In the past, my intention has been to be more financially literate. That helped me engage with more books, articles, and podcasts and learn more about finances. These are just statements that you come up with that you can remind yourself of often and help form a comforting ritual.
3. Create a List of Your Personal Financial Information
Google Docs is a great free tool. List out everything that has anything to do with your finances. Include credit cards, insurance policies, 401(k) plans, bank accounts, and anything else related to money. You don’t even need to finish the list; just sit down and get it started. If you have multiple banks for different areas of your life, make sure to note all the appropriate information and what kind of accounts you have at each bank.
4. Make Your Financial Information Accessible
Find a tool you can use to store all your passwords and user names. This should be something that your family members could access if they needed to. For me, I have 1Password, which has a lot of security features. It allows me to print out a key to keep in the safe. You want to ensure that things are well organized and that your partner knows where to access the information in case they need it.
5. Start Talking About Money with Partners and Children
Conversations about money can be challenging and uncomfortable. Be prepared that you might say the wrong thing and need to apologize. Start by asking about goals and dreams. Admit it if you’re uncomfortable. Share the things you hope to change and work on, and let the conversation flow from there. My advice would be to save this talk for a time when you can both be present and not do what I did in the past and bring it up right before bedtime.
6. Protect Your Assets
Review what you already have in place to protect your assets. If you haven’t put together a will, get started. Speak to an estate attorney about a trust. Start with scheduling a consultation with an attorney and see the steps to get this in motion.
7. Schedule a Time to Review Your Transactions
Add time to your calendar when you review the transactions on your credit card and bank statements. This isn’t a time to judge the spending, it’s more about creating mindfulness and understanding behaviors. There have been times when I’ve seen charges I wasn’t aware of, and it’s good to dive in and make sure there isn’t anything fraudulent happening. Put that time on your schedule so you have the reminder.
8. Try an App
There are some great tools available that can help do the previous action. I’ve mentioned Rocket Money before on the podcast. It’s the app I really like for tracking money. I like the app’s visuals; you can attach your accounts and see everything in one spot. Check out the tools that are available and see if there are any that would make this process easier for you.
9. Make a Habit of Checking Your Credit Report At Least Once a Year
If you haven’t checked your credit report in the last year, do it now. Your credit score is important for many reasons. If you want a business loan or business line of credit, you need a good score. It can also help you get lower interest rates than the standard. If your score isn’t exceptional, you can start by ensuring the reports are accurate. If there are discrepancies that could hurt your credit score, you can start working to resolve them.
10. Set Up Free Accounts with Credit Reporting Companies
TransUnion, Experian, and Equifax are the three credit reporting bureaus. You can set up free accounts with each one and freeze your credit. Some people do this if they are concerned about identity theft. My credit remains frozen, and I just unfreeze if I apply for a new credit card or loan. This keeps me protected from someone opening a credit card in my name.
11. Create or Reevaluate Your Emergency Fund
This is a great time to look at your emergency fund. If you haven’t started one yet, you can set some goals. If you already have one started, check on the balance and determine if you need to make any adjustments. Some people don’t like to call it an emergency fund because of the negative connotations, but the name doesn’t really matter. It’s just a way to prepare for a time when you might need access to cash.
A good rule of thumb for single-income households is to save up six months of emergency funds. For dual-income households where both parties are steadily earning, you can start with three months of expenses saved up. Typically, both parties won’t experience a crisis at the same time.
12. Updating Beneficiary Information
This action will just take a few minutes, so it’s easy to do. Check the beneficiary information on your retirement funds and life insurance. You want to ensure the correct people are attached so that if something happens to you, your estate will be protected. This step can be done online; you might already have the correct information there. Take a minute and verify for each account.
13. Make a Plan to Pay Down High-Leverage Credit Card Debt
Credit card companies have their own rates for each card user. Consider paying down the cards with the highest APR. Some of them are astronomical; the longer you carry a balance, the more money you give those companies. When you’re thinking about your financial goals for the new year, consider credit card debts being one of them.
14. Consider a Sinking Fund for Short-Term Goals
This is one of my favorite things to do. I’ve got a few sinking funds set up, and I will open up a few more this year. These are spending accounts. It’s an account you add to each week or month for larger expenses. It’s an excellent option for pet expenses, saving for the holidays or vacations, or buying a new car. I have one for my dogs, for example. It’s nice to have money saved up when there are large expenses like vaccines. We use this fund instead of having pet insurance.
15. Try a No-Spend Month
Last but not least, consider a no-spend month. Especially when you’re decompressing from the holidays, you might be a little overspent on things. It’s a financially chaotic time of year for many people. I often use January as a financial cleanse and give my accounts a break. Only buy the basic needs for the month. Many of my clients also love this action and learn so much about spending habits. It’s all about self-discovery and intentionality.
Final Advice and Thoughts
While this list is far from exhaustive, it does have a little something for everybody, regardless of where you are in your money journey. Whether you’re adding some time slots to your calendar or making some lists of accounts, you’ll be taking a step towards a more financially strong year ahead. Take action today.
I would love to hear from you to find out which actions you took.