1. Update your budget.
Between inflation and rising interest rates, your budget may be severely out of date since you last reviewed it. I always recommend with all my clients “a new year should be the start of a new budget”, Start today by writing down your money goals and expenses and from there begin to build towards your new budget. Another thing I tell clients at every year end, now is a great time to take audit of your subscriptions and cancel any unused services. My wife and I do this and always smile at the savings and “found money”. You can too!!
2. Make a plan for your student loans.
The federal student loan payment pause has been extended, so you won’t have a bill due in January after all. It’s unclear when payments will resume because of ongoing litigation, but that could free up a few hundred dollars each month, depending on your balance. You may have had some extra cash on hand for a while—payments have paused since early 2020—but the pause’s renewal is another chance to be mindful of how you’re spending. Review your finances to see where it can be best put to work. Will you invest it? Put it toward a down payment? Use it to stave off the pains of inflation?
One suggestion, if you don’t need the money to cover daily expenses: Stash it in a high-yield savings account. With rates rising again, you can earn a little bit on your balance, and have the cash accessible when the payment pause officially ends.
3. Open a high-yield savings account.
Speaking clearly on this matter, with interest rates on the rise again, consider opening a high-yield savings account. Many banks are offering yields as high as 3%. Just watch out for any fees or account minimums. The best way to build up your savings once you open a high-yield account? Set up automatic transfers weekly or monthly so you don’t have to do the work of moving the money each month. Put them on “Autopilot” and set it and forget it! Start with a small amount and increase your contribution where possible. Just get it started!