“If you haven’t started, then taking action is more important than finding the best strategy. If you’re already taking action, then ensuring you’re working on the right thing is more important than working harder.” – James Clear, Atomic Habits
Today, we’re going to focus on the first part of that quote, “If you haven’t started, then taking action is more important than finding the best strategy.”
I’m sure that you have a bunch of goals that you want to accomplish in 2020 (stick to a budget, pay down debt, save more, etc.), and we’ll talk about how you can be successful at achieving those throughout the rest of January, but I want to help you start off the year right by giving you 5 easy things that you can accomplish that will hopefully help you maintain some motivation to continue making progress in your personal financial life beyond the initial motivation that you have at the beginning of the year.
I’ll give you 5 personal finance wins now, 5 for February that will require a little more effort, and maybe even 5 for March so that you can keep making progress well into the year.
5 Easy Personal Finance Wins For January
The 5 wins that I’m going to give you to accomplish in January to improve your personal finances will be pretty simple and easy to do, but that doesn’t mean that they’re not important and impactful. I want you to have 5 easy wins under your belt to start the year that will help you build momentum and confidence to continue making your personal finances better throughout the rest of the year.
So, with that intro, here are 5 Easy Personal Finance Wins for the New Year.
1. Check your credit report & create a monitoring schedule
This should be a pretty easy win for you, but it’s something that most people don’t do and something that I don’t think most people realize how important it really is. There are really two parts to this, so I’m kind of giving you two wins in one, but they go together and can be accomplished at the same time.
The first part of this win is to check your credit report. (If you don’t know what a credit report is you can learn more about that here.) You’re entitled to receive one free report from each of the three major credit reporting agencies every 12 months only through annualcreditreport.com – this is the only website that the FTC states is authorized to do this. Please be mindful about imposter websites that may be trying to steal your information.
Checking your credit report is so important because this is part of what lenders will look at when considering extending a loan to you and it can help you find out if you’ve been a victim of fraudulent activity. You want to go through your credit report with a fine-tooth comb and make sure that there are no inaccuracies, errors, or other erroneous information. If there is, then you should act to get it taken care of immediately by going directly to the credit reporting company that’s reporting the error as well as the creditor (bank or other lending institution) where the information is coming from.
The second part of this win is to create a schedule to continue checking your credit report throughout the year. Since you’re entitled to a free credit report from each of the three reporting agencies every 12 months, you can pull a report from a different agency every four months to stay on top of things and make sure that there isn’t any undetected fraudulent activity in your name.
For example, you could pull your Experian report in January, your TransUnion report in May, your Equifax report in September, and then your Experian report again next January. This strategy allows you to keep an eye on your credit report throughout the year without having to pay for it.
2. Freeze your credit reports
Placing credit freezes on your credit reports is another easy, but extremely important win for you. A credit freeze (also known as security freeze) allows you to prevent lenders from accessing your credit report. This is important because it can help to prevent an account from being fraudulently opened in your name since most creditors have to see your credit report before they’ll open an account for you (think of a mortgage, credit card, or even utilities). Consider how many times your personal information has probably been shared over the dark web due to all of the data breaches that have happened over the past couple of years. Having a credit freeze in place could potentially save you years of stress and a ton of money.
To place a credit freeze (or security freeze), you’ll have to go to the credit reporting bureaus’ websites. You’ll be able to find a link to place a freeze on all three of the websites and they’ll take you through the step-by-step process of verifying your identity, creating a login, and getting the freeze in place. You’ll need to make sure to store your login information and/or PIN in a secure place, or else you’ll have some headaches to go through when you need them later.
Please keep in mind that if you plan on opening a new account with a creditor such as when you’re applying for a mortgage or a new credit card, you’ll need to temporarily lift your credit freeze so that the creditor can get a copy of your credit report. This is why it’s so important to remember the password and/or PIN that you created. It will be a little bit of a hassle in the future to have the freezes lifted when you need to, but it’s well worth it to help ensure that accounts aren’t being opened in your name and your credit isn’t being destroyed behind your back.
3. Increase your retirement savings contributions by 1%
I guess that this win is assuming that you’re already making automatic contributions into your employer-provided retirement plan (whether that’s a 401(k), a 403(b), or something else) that are being contributed from your pay before your check hits your bank account.
A lot of retirement account providers allow you to update your contributions directly from your login, but sometimes you have to go through your employer or HR department to increase your contributions. Maybe another win here for you is to setup your retirement account login so that you can monitor it going forward and to help you make sure that no one else with bad intentions creates a login before you do. Or, maybe the win for you here is to actually START contributing to your retirement plan.
Increasing your retirement savings contributions by 1% may not sound like much or may not sound like it’s worth it, but can really pay off over the long-run. And if it does sound like it’s not much, then that’s even better because that tells me that you’re not going to notice it too much – so maybe you should increase it by more than 1%. The more that you can automate good financial habits and make them out of sight out of mind, the better. Also, I think the less they hurt, the more you’ll be willing to put them into place and build on them.
This should be a really easy win that doesn’t hurt much at all.
4. Increase your automatic payments on your high interest rate debt
Paying down debt more quickly isn’t always the best answer, even though it’s probably one of your New Year’s resolutions. (I’ll address this further in my post on January 21.) If you have balances on a credit card, personal loan, student loan, or something else that has a high interest rate, then paying down debt more quickly very well could be the best answer and another win for you to start off the year might be to increase (or even setup if you don’t have it in place) your automatic payments.
If you have credit cards, then the goal is to pay the balances off in full each month. But life happens and sometimes you’re not prepared for it so you end up with a credit card balance or some other form of high interest rate debt. If this is the case, then you should be making well above the minimum payment and your payments should be made automatically so that you won’t have to pay late penalties and so that you won’t be tempted to make a lower payment for some reason one month.
Let’s say that you do have automatic payments in place on all of your high interest debts. Why not go in and increase the automatic payments by $10, $50, $100, or whatever the number is that you can do? Again, I want to stress making your wins automatic when you can so that they’re as easy as possible on you and so that you don’t have to continue putting too much effort into them and ultimately into improving your personal financial situation.
5. Setup automatic payments and online bill pay
We’re going to stick with the theme of automation here because it’s something that’s so important to helping you improve your personal finances and it’s a way to do something once that’s pretty easy to accomplish but that can have a huge impact in the long-term.
Setting up automatic payments, or using the bill pay feature of your bank account, can be huge because it takes stress off of you and frees up some brain capacity, saves you time, and can save you money. Not having to worry about logging into all of your accounts and paying your bills every month can not only give you some time back and help to relieve a little stress, but it can also be a way to make sure that your bills are paid on time and that you don’t have to pay any sort of late fees. No matter whether it’s your utility bills, debt payments, or something else, you should be making automatic payments when possible to save time and money.
Online bill pay is a feature that a lot of banks have where you can pay your bills online directly from your bank account instead of having to login to each individual bill that you have to pay. This can take a little bit of work to setup since you have to add all of the companies that you’re paying bills to, but the upfront time spent can save you a lot more time and money in the long run. After you have your bill pay setup, your bank will pay the bills for you and make sure they’re paid on time. You can even use online bill pay if you have bills that you can’t pay online and have to pay by check for some reason.
Start The Year With 5 Wins
Let’s recap the 5 easy personal finance wins that you’re going to have under your belt by the end of this month:
- Check your credit report & create a monitoring schedule
- Lock or freeze your credit reports
- Increase your retirement savings contributions by 1%
- Increase your high interest rate automatic debt payments
- Setup automatic payments and online bill pay
Some of these will take a little time, but they’re pretty easy to accomplish and I think you could easily get most of these done in a couple of hours or less if you wanted. I’m giving you until the beginning of February and then I’ll give you 5 more things to work towards that will require a little more effort than the 5 tasks from today so that you can keep making progress in 2020.
