Start the New Year Right: 5 Financial Hacks for Millennials

This past year might not have turned out like you wanted it to. Perhaps you were hoping to get an amazing promotion that went to one of your co-workers instead. Or maybe you were hoping to save more money toward your dream trip but you ended up spending that money on too many bags of Flamin’ Hot Cheetos. No matter what went wrong for you financially this year, the new year is an opportunity to turn everything around and start fresh — 2015 just might be the year you finally get your financial house in order.

Here are five tips to help you start the year off on the right financial footing.

Do a Student Loan Checkup

Many millennials are burdened by student loans, so it makes sense to ensure that you’re getting the best terms possible for paying back the loans. Look into consolidating your federal loans and refinancing your private student loans. By refinancing your loans you can potentially get a lower interest rate and better repayment terms, saving you thousands of dollars in interest over the life of the loan and hundreds of dollars a month on your payments. I try not to pay more interest than I have to because doing so is basically like kissing your money and throwing it into the wind. You might also consider changing your payment plan in order to either accelerate your payments or space them out over more years.

Get a Financial Plan

Trying to accomplish your financial goals without a detailed financial plan is like getting on a plane without knowing your final destination. You’ll probably end up somewhere, but it might not be where you wanted to go and it might take longer than you expect.

A financial plan involves you sitting down and figuring out what you want in life and how much money it will take to make that possible. While you can make a financial plan yourself, it might be easier down with a certified financial planner. I recommend finding a fee-only planner who doesn’t earn a commission on any of the products he or she recommends. While financial advisers and financial professionals who earn commissions can also give you excellent advice, I like to be certain that advice I am provided is completely in my interest.

Build an Emergency Fund

If you haven’t already saved up enough to cover your expenses for at least three to six months, then 2015 is the year to do it. Having cash reserves to cover you in case of an emergency will give you peace of mind and ensure you won’t have to rely on credit cards if something goes wrong. If saving an emergency fund is impossible right now, consider at least opening a low-interest line of credit from your bank, or a low-interest-rate credit card to cover you in the event of an emergency. While cash reserves are best, having low-interest credit available is much better than resorting to high-interest credit cards if you need them in an emergency.

Start a Side Hustle

Many personal finance experts will tell you to be frugal, to clip coupons, and to do very elaborate and time-consuming things to save a small amount of money. This isn’t always the best advice since you’re often better off working at a side hustle to make $20 to $30 an hour than spending that time saving $10. Stop focusing so intently on saving your money and look for opportunities increase your income. You might consider cleaning houses on the weekends, driving seniors around, or becoming a personal trainer. If there aren’t any opportunities where you live to make some money on the side, there are some good opportunities online for a side hustle.

Get a Handle on your Credit

One of the biggest mistakes people make is not paying enough attention to building good credit. The problem with ignoring your credit is that down the road having a low credit score can potentially cost you tens of thousand dollars more on your mortgage or other loans over the course of your life (this calculator can show you how much it could cost you). The first thing you should do is check your credit score — which you can get for free on Credit.com, along with a summary of your credit report. Once you know what it is, you know what you have to do to improve or maintain it. Next, you should learn more about how your credit score is calculated and aim to keep your credit card balances to 10% or less of your total limit and make your payments on time, every time. If you have a short credit history, you might consider getting an immediate family member with good credit to add you as an authorized user on a credit card that they’ve had for a long time, and on which they are in good standing. The credit history of their card will then be added to your credit history and can help your score. You might also consider getting a secured credit card, and be sure to charge no more than you can pay off every month. Also, make sure to get a free copy of your credit report from each of the three major credit reporting agencies once a year and check them for accuracy.

With these simple hacks, you’ll be well on your way to ensuring that your financial future in 2015 is a brighter one!