How to Get Financially Fit before the end of the year

The year 2018 is already reached the halfway point, and with that, for the masses, should bring with it more than just thoughts of a Fall wardrobe or what exactly you’ll be doing for the holidays.

Those topics might be a little premature in July, but one point of discussion that shouldn’t be overlooked is how you’re doing financially this year.

A few questions that have to be answered come in the form of the obvious, and not so easy to ask.

Are you budgeting? Have you check expenses lately, looking for better pricing or ways to cut costs?

Did you overspend over the 2017 holiday season, and have you recovered from it? Were you in line for every Memorial Day and 4th of July sale there was, and thus spent far too much or didn’t buy the products that made the most sense, discount wise?

Whatever your means of spending, saving, buying or budgeting have been thus far in 2018, the year isn’t too far gone for you to make wholesale changes to your financial future that is the rest of this year and start off 2019 with the resolution that you won’t need to make one that centers on financial stability and better money management.

A few of those aforementioned questions come self diagnosis of how you spend and save, or if you’re truly doing what is necessary to really treat your day to day buying power as your own personal business.

Overspending on the holidays likely put the majority of people behind the proverbial eight ball as sales were up to their highest level since 2011, a whopping 4.9 percent increase in that six-year span of buying.^[1]

Spending increases during the end of 2017 sparked a trend, not surprisingly, that saw retail sales in 2018 rise steadily from one month to the next with a strong outlook in sales growth for the remainder of this year.

For example, retailer sales rose in April, a second consecutive month gain versus March of this year, .3 percent from March to April and a .8 increase in March as well versus February of this year.^[2]

January of this year started slow, per the report, but that isn’t unheard of since most of the consumer base across the board is tapped out after December comes and goes.

The idea that sales are on the rise, and retail is gaining more revenue should be seen as a good and potentially bad thing, since the latter sentiment has to do with how much you’re spending potentially.

Take April, 2018, for example. Sales looked strong, but most of that was guided by income tax returns being put back into buying goods and services. Pumping up the economy is a good thing, overall, but what about putting some of that money to better use in a savings account?

Those value of sales were up .3 percent in April.^[3]

Hope abounds, however, for the general public when it comes to tax returns, too, with 43 percent saying they’re saving it, versus about 10 percent who are going on a vacation.^[4]

So with that, you have a little bit of hope that the entire return isn’t spent freely and without justification.

With tax season and returns behind us, the holidays a distant memory and retail sales flourishing, now would be a good time to see where you stand against all the statistics and whether you’ve managed to buy, save and budget all in the same breath.

Or, are you one of those 10 percent persons who have spent rather than saved their return, for example, and are spending at a record pace with nothing to show for it halfway through the year?

No matter which end of the spectrum you reside on, you can easily turn around 2018 into your favor with these suggestions to finish the year strong.

Reset, Review Budget: Cut Expenses or, at the very least, shop for better pricing

Budgeting isn’t for everyone, but it should be.

Plain and simple, the average person does one of two things: budget and then not follow it, or simply not budget whatsoever.

The good news is about 41 percent of people use a budget.^[5]

The bad news of course is the opposite of the “good news” percentage: more than half (59 percent) don’t budget at all, and that creates an imbalance on how you save (or can’t) money.

If you don’t know what you’re buying or spending money on, how can you possibly track savings?

The middle of the year is the most opportunistic time to reset and review your budget, making changes to it, whether those are tweaks or wholesale moves.

One of the better and more efficient things to do with your budget is to review your expenses and make cuts where you need to, or find ways to lower the monthly bills you’re paying, while keeping the perks of whatever that expense might be.

A lot of this centers on things you’re buying, not tracking and thus would be considered “budget busters,” suggesting that you have all the big things accounts for, but fail to recall that you’re buying lunch every day, bottles of water to fill your garage or any other expenses that you consider incidental but actually takes out huge, decisive chunks from your savings plan.

Consider food as a microcosm of how to save money.

Americans spend more than $7,000 per year on food, and you can see quickly how much of that is take-out food ($3,000).^[6]

So cooking meals at home, obviously, seems like the better choice with that amount of money (3 grand) saved.

Think car insurance for lower quotes or pricing, cable being replaced by streaming or doing more of a plan that focuses less on high priced monthly rates and more on piecing together an a la carte lineup.

Geico, for example, is 12 percent lower versus Progressive and 44 percent cheaper than Allstate.^[7] Those other two offer perks, sure, but if you’re a good driver, minimal claims, why wouldn’t you save the 12 to 44 percent in price?

The average cost of cable television is between $100 and $200 monthly, with price increases on the rise. Comcast says its expecting a 2.2 percent increase this year, with Direct TV (AT&T) up $8 per month (the average bill is up 53% from 2007 to 2017).^[8]

The average cost of a cell phone plan is $73.^[9]

So budgeting isn’t so much about just doing or having one, but how you maintain it within the course of not only a year but a lifetime. 2018 can be a start.

Rule 2: Plan to Get Rid of Debt

Debt is an “ugly” word, and something that plagues the majority of individual who want to do better financially but can’t escape this part of it.

Your debt to income ratio should be 36 percent, on average.^[10]

The maximum acceptable rate is 43 percent.^[11]

If 2018 and the final six months of it doesn’t include a plan to get to this figure, you’re not planning that well for a strong close into 2019.

Debt can be solved in a number of ways, and if you follow the previously mentioned Rule 1, you’ll have more income and more means of saving money, thus padding your savings account and ultimately avoiding having to borrow money or use credit cards.

You also can use several debt methods of repayment that get the debt paid off quicker. First, any money you save by cutting expenses can be put toward your credit card or debt in general, even an extra $50 per month on a car payment can lower your terms significantly. Several banks offer an early payoff calculator and in same cases you can shorten term by one year, for instance.

In addition, if you’re battling hefty credit card debt (and most are), you can focus on paying the minimum payments on all your debt and focusing on the largest interest rates or start paying off the smaller loans, showing progress and then working your way up to the loans that the biggest (inverted pyramid). Once the smaller loans are paid in full, take that money and put it toward the next smallest loan until all debt is paid.

The average credit card balance per person is around $4,041.^[12]

As always, if you’re trying to pay down debt, you also want to avoid accumulating any new debt.

One of the bigger mistakes people make is they fall back into old spending habits once they see their debt start to fall off, one card or lender after another. They see the progress and assume what’s a few charges here in there on the plastic card going to really hurt.

It’s habit forming, and will put you back into that same position quickly.

The positivity surrounding debt seems to be improving with 12 percent of Americans saying they’ll die in debt versus last year’s 21 percent.^[13]

So, all hope isn’t lost, but if you’re ignoring debt to end 2018, you’ll end up feeling more hopeless than happy in 2019.

Finding balance financially isn’t easy.

Americans worry about money constantly, and whether it’s 2018 or 2080, that most likely is going to be a trend.

The good news is 2018 brings with it thoughts of prosperity and general comfortability with how the average person sees money.

The retail forecast for 2018 seems to be on target with a 3.8 to 4.4 percent increase expected as the year closes out.^[14]

That said, generally speaking, the economy isn’t a source of concern for people in 2018, either.

But a lot of that “greatness” in 2018 economically speaking is masque with concerns that are as old as time.

Forty percent of people don’t have $400 or more saved, and 43 percent can’t afford day to day living, with 22 percent of adults who can’t pay their bills every month.^[15]Those alarming numbers bring with it a crash course of reality and brings budgeting and spending, along with saving, back to Earth and an even more concern that turning around your habits or your financial status, despite increase in retail sales, is essential for success this year and beyond.