A brand-new year provides the perfect opportunity to make meaningful life changes, including improved financial wellness. These five financial resolutions can help get your year off to a promising start so that you are financially fit for the new year.
- Get on budget. Take charge of your finances by creating a budget. Start by calculating after-tax income and subtracting fixed monthly expenses. Then allocate portions of the remaining income for savings, important goals and a few things that just make you happy. If this sounds complicated, relax; today’s user-friendly budget apps can take a lot of the pain out of the process. To further simplify money matters, consider setting up automatic bill pay, an automatic savings plan (like RollUp Savings) and separate savings accounts for specific goals.
- Build an emergency fund. Without a solid cushion, any unexpected job loss, medical challenge or serious property damage could lead to lasting financial hardship. An emergency fund with three to six months’ worth of expenses can protect your standard of living and offer peace of mind. Commit to making consistent deposits to this fund even if you can only spare a small amount each month. Because you may need to tap into emergency cash at a moment’s notice, choose a savings account that gives you easy access, such as a High Yield Online Savings account or RollUp Savings account.
- Prepare for retirement. Retirement may not be on the immediate horizon, but when the time comes it may well last 20 years or more. You’ll probably need somewhere from 70-90% of your final-year income for each year of retirement, and it’s unlikely that Social Security will be sufficient. Saving such a sizeable sum takes decades, so it pays to start early. Put as much as you can afford into tax-advantaged Roth or traditional IRAs, and if your job provides a 401(k) plan, contribute the maximum employer-matched amount.
- Improve your credit. You likely know that credit scores affect financing approval and interest rates. But the influence of those three little numbers actually stretches much further. Prospective employers and landlords frequently check credit, so low scores may mean missing out on the best jobs and apartments. Credit scores also may affect insurance premiums, mobile phone offers, vacation costs, and even whether utility hookups require a cash deposit. At the credit union we have several credit building tools including our Credit Builder Loan as well as free credit counseling to get you on the right path.
- Knock down debt. Even with a great job, high-interest debt can sabotage financial health. To dig out from under this burden, consider concentrating efforts on your highest interest debt first while continuing to make timely smaller payments on all other obligations. If you’re interested in learning more about the snow ball method of paying off getting our of debt, check out our blog “A Snowballs Chance”.
2020 is the year to get of debt and get on the right road to financial freedom.
Happy New Year!