As you think about what you want to accomplish in the new year, some financial goals might be on your mind. Maybe you want to make this the year you knock out the rest of your student loan debt, pay off your car, or start earning more money.
There are many ways to set and achieve your new-year goals. But with so many ways to improve your financial life, you might be wondering where to start.
This guide can help you hone in on the most important financial goal to hit this year. We’ve put together a list of nine goals you might want to reach in 2018, depending on your current financial situation.
If you still have student loans …
Your student loan debt is probably quite the financial burden. And it costs you a significant amount of money thanks to the interest that grows over time.
Make it your financial goal to pay off at least one student loan this year. And if that’s not possible, you can still make a serious dent in what you owe by taking on one of these strategies to crushing your debt.
1. Pick a method for paying off your balances
Whether it’s the debt snowball or the debt avalanche method, choose a path of repayment when tackling your federal and private student loans.
Depending on which repayment strategy you choose, you’ll aim to either pay off your student loan with the smallest balance or the one with the highest interest rate.
2. Sign up for the right repayment plan
Set a goal to pick a repayment plan that will help you better manage your federal student loan debt.
If that sounds daunting, your goal could be to learn about your repayment options. That way you can later decide whether there’s a program available that could help you.
3. Make extra payments
If you’re paying the minimum on your student loans, consider sticking to a financial goal of making an extra payment every month this year.
You can also increase your current payment by a set dollar amount or percentage. This can help you pay down your loans faster and save you money on interest in the process. You can calculate how much you’d save using our calculator below.
4. Pay off your student loans
If you’re considering big financial goals in 2018, here is a really big one: Pay off every last cent of your student loan debt. A few actions you could take include:
- Cut expenses and put the savings toward your debt.
- Reduce your cost of living by moving to a new location, taking on roommates, or embracing a frugal lifestyle this year.
- Earn more money at your job, work a side hustle, or seek a new position with higher pay.
If you’ve already paid off your debt …
You might not need to focus on student loan repayment in 2018 if you’ve already checked that financial goal off your list. Here are a few more new-year goals you can tackle instead.
5. Max out your retirement account
Whether it’s your 401(k) or an individual retirement account, try increasing your contributions this year and putting in the maximum amount allowed.
Here’s how much you can contribute in 2018 if you’re under the age of 50, according to the IRS:
- 401(k) plans: $18,500
- Traditional and Roth IRAs: $5,500
- SIMPLE IRAs: $12,500
Select your retirement account and divide the maximum contribution allowed by 12. This will show you how much you need to save each month to hit your financial goal by the end of the year.
If that goal sounds too lofty, you can still increase how much you contribute each month.
You might also want to max out your Health Savings Account if you have one. This can be viewed as a retirement account because you can roll over the funds year to year.
If you enter retirement with money in your HSA, you can use those funds tax free for medical expenses. You only need to contribute $3,450 in 2018 to max out an HSA, according to the Society for Human Resource Management. That breaks down to $287.50 per month.
6. Start a wealth-building fund
If you’re already on track with your retirement-related financial goals, look at the years between now and age 68.
You’ll likely want to do a lot of big things with your life before you reach retirement. So, in addition to saving in a 401(k), make sure you’re also investing in accounts you can withdraw from before retirement.
Consider opening a brokerage account and contributing to it regularly. Doing so allows you to build wealth you can use throughout your life, not just when you retire.
7. Build up your emergency savings
Nearly a quarter of Americans wouldn’t be able to cover an emergency expense if it popped up tomorrow, according to a 2017 Bankrate survey.
For your 2018 financial goal, build financial security by adding to your emergency fund.
Your first step is deciding how much you want to keep in your emergency savings. A good rule of thumb is to have three to six months’ worth of income stowed.
Divide this number by 12 to find the amount you need to save each month to reach your new-year goal. Once you have a number, set up automatic transfers to force yourself to save.
If you’re getting ready to graduate from school …
The end of your university years is in sight, and you’re ready to go out into the real world.
Although you might be preparing to celebrate, now’s the time to also think about your financial goals and how to prepare for success. Here are a couple of goals you can start working toward before graduation.
8. Create a budget
You might not know what your income will look like once you land your first job out of college. But you can make conservative estimates and put together a budget while you’re still used to living on a smaller amount of money.
This is especially helpful if you expect to earn a lot more once you graduate.
By keeping your expenses low on your higher income, you can generate more cash flow. From there, you can choose what to do with the extra cash. You can repay your student loans faster, for example.
9. Get a head start on student loan repayment
You want to start repaying your student loans as soon as possible. Create a plan now and know what actions you need to take to stay on track with payments.
The sooner you pick up the habit of sending in that monthly payment, the easier it will be to manage your student loan debt. What you want to avoid is getting used to spending your money on other things.
Start paying off your student loans as soon as possible. Your future self will thank you for not letting growing interest inhibit other financial goals.
Andrew Pentis contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.36% APR (with Auto Pay) to 7.82% APR (with Auto Pay). Variable rate loan rates range from 2.41% APR (with Auto Pay) to 6.99% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.45% effective May 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.41% – 6.99%1||Undergrad & Graduate|
|2.41% – 7.89%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.38% – 6.81%4||Undergrad & Graduate|
|2.41% – 8.19%5||Undergrad & Graduate|
|2.60% – 9.60%6||Undergrad & Graduate|