When a new year rolls around, it’s a good time to get a fresh perspective on your finances. That includes reviewing how you save and spend, building a better budget and finding ways to make improvements as well as achieving some of your goals.
Here are some idea starters.
Determine to Live Within Your Means
Refreshing your budget at the start of a new year is always a good idea. A quick way to do this is to calculate your spending using our Household Cash Flow Tracker. Secure budgeting apps are helpful too because you can track things in real time.
Whatever method you choose, review your new budget closely for the first few months and find areas where you can cut back and save more. Don’t forget about your short- and long-term financial goals and money you can put toward them.
Get a Handle on High-Interest Debt
If you’re not paying your credit card balances off each month, a debt paydown strategy can help you make progress. If you have multiple credit card accounts, try the snowball method by focusing on the card with the highest interest rate first. Pay the most you can afford on that card, while paying minimum amounts on the others. Once you have that debt paid off move on to the next card.
You might also consider a personal loan or credit card balance transfer with no transaction fees to consolidate debts. This could allow you to make just one monthly payment while potentially saving on interest.
If you feel like you’re a bit stuck, get one-on-one counseling, with GreenPath Financial Wellness. The experts at GreenPath will help you create an action plan to pay off debt once and for all.
Once you have a budget and a plan to eliminate lingering debt, focus on setting aside money for the unexpected. An emergency fund provides a buffer for unforeseen expenses like medical bills, auto repairs, or income loss due to job disruptions.
Establish a savings target. Many experts suggest saving 10% of your income. Sign up for direct deposit so a portion of each paycheck goes directly into savings. Take advantage of high-yield savings accounts or share certificates to keep your savings growing.
Contribute to Your Retirement
The best way to save more for retirement is by using tax-advantaged accounts such as company-sponsored 401(k)s, 403(b)s and 457(b)s or Individual Retirement Accounts (IRAs). You can get an extra boost from a 401(k) plan, because your employer will usually match what you invest — typically from 2% to 8% of your salary. From your first paycheck, you should set up automatic contributions to match your employer's match and try to build up to at least 10% of your pre-tax income. If you have a plan with no match, contribute as much as you can and again work toward that 10%.
Monitor Your Credit Score
It’s easier than ever to track and improve your credit score. With an excellent score you’ll have more buying power and better interest rates. Pay your bills on time, don’t max out your credit limits and only apply for credit you need. Review your credit reports and dispute errors or potential identity theft.
Take Charge of Your Financial Decisions
When you’re making financial decisions, knowledge is power. Whether you want to buy a car, a home or invest in the stock market, take advantage of current insights and understand market conditions. For instance, the car buying market is changing, with more inventory on the market. But interest rates remain high and newer vehicles come with higher price tags. When you look at your budget can you afford the monthly payments? Will your credit score allow you to take advantage of the most competitive rates? Can you afford to use cash? Do you need the car or just want it? Asking these questions will help you stick with your budget and make choices that improve your financial life.
Get Help When You Need It
Consulting with a financial professional and creating a holistic financial plan will help you not only manage your day-to-day finances but work toward your hopes and dreams too. Many credit unions like SchoolsFirst FCU offer free financial guidance as a benefit of Membership.