You’ve probably thought about other life goals: getting fit or healthy, becoming more intentional with your time, or learning a new skill. But what about money goals?
A brand new year provides the perfect opportunity to make meaningful life changes, including improved financial wellness. The following financial resolutions can help get your year off to a promising start. Finances are not one size fits all…try a couple, do them all, space them out, tackle one a month. These are your goals, try what works for you:
1. Create and stick to a 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. Check out our free personal finance manager, Trends, to make tracking easy. To further simplify money matters, consider setting up automatic bill pay, an automatic savings plan and separate savings accounts for specific goals such as Holiday and Vacation Savings.
2. 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. Start small by committing to saving at least 10% of your income with a goal of saving one month of expenses. Once you do, increase your goal to two months and so forth. But remember, you must pay yourself first! This means that before you pay your bills, buy groceries, or anything else vital before setting aside a portion of your income to save. In essence, the first bill you should be paying each month is to YOU!
3. Get out of debt
Even with a great job, high-interest debt can sabotage financial health. To get back on track, consider concentrating efforts on your highest interest debt first while continuing to make timely smaller payments on all other obligations. When the first balance is satisfied, focus on the most expensive remaining debt and continue this way until you’re debt-free.
If debt from multiple sources is unmanageable, debt consolidation may help you regain control. This approach streamlines debts into one payment, often with reduced interest and a lower monthly cost. Depending on your individual situation, home equity financing, personal loans or zero interest balance transfer credit cards may be effective debt consolidation choices. Our Listening & Lending program offers solutions for even the toughest situations.
4. Live on less than you earn.
The best way to get ahead is to stop getting behind. It’s not poetry. It’s not science. It’s common sense. Budget every month, find deals, use coupons, save to pay cash, and—super importantly—learn to say no, at least sometimes, to stuff that costs money. The easiest way to make sure you’re not spending more than you make is to create a plan for your money and stick to it—aka a budget. It’s easy to see why this one’s on a list of important financial goals. Spend less, and you’ll accelerate all your money goals.
5. Travel more.
Not all money goals are serious and stuffy. Some look really good on Instagram! Is traveling one of your top money goals? Maybe you don’t want stuff as much as you want experiences, or maybe you’ve just always had the travel bug. Either way, start a Vacation Savings Account for the trip of your dreams, and you can make it come true—maybe even sooner than you think!
6. Save money to pay cash for big ticket items.
Not only should you cash-flow travel, but you should also cash-flow big purchases. Cars, furniture, technology—these things cost money. Having dollar bills in hand to pay for these items—in full—is a fabulous financial goal. This puts you in the driver’s seat, steering yourself toward owning things rather than owing for things.
7. Start banking on your future
Whether it’s starting up a savings account or contributing to your employer’s retirement plan, an individual retirement account, or stocks and bonds, where you put your money and how you allow it to work for you will help you get your financial life in order. 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 to 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. If you need help starting out, set up a complimentary meeting with Investment Services to discuss your retirement strategy.
8. 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. For top scores:
- Pay all bills on time.
- Keep credit card balances at no more than 20% to 30% of the credit limit.
- Carry a mix of debt types such as credit cards, auto loans and personal loans.
- Monitor credit to catch and correct any errors or problems. Access your credit score for FREE within the Mobile Banking app and Online Banking!
9. Reevaluate your goals every now and then.
Life changes. People change. Goals can change. That’s okay. Don’t abandon a goal just because it’s going to mean hard work. But don’t hold on to an outdated goal just because you don’t want to feel like a failure. Accepting that you’re heading in a different direction than you once thought isn’t failure. It’s actually healthy!
Reevaluate your money goals every year, every six months—and maybe every month if you’re into it. Never be afraid to make changes so these goals better suit where you are and where you’re going.
10. Educate Yourself
A well-informed consumer is critical to a strong and stable economy.Unfortunately, many Americans are unfamiliar with even the most basic economic concepts needed to make saving and investment decisions. In fact, research shows that more than half would fail a basic finance quiz. This lack of financial knowledge presents serious barriers in home purchases, retirement planning, and other financial choices. Being a lifetime learner is one of the most important values of the credit union—it’s even written into our Mission. We offer free seminars throughout the year about different financial literacy topics. Sign up for our bi-monthly eNewsletter, follow us on social media (facebook, twitter, instagram, pinterest, youtube) and check our website often for trending money issues. And if you have a question, ask!
Goal diggers, you’ve got this. Seriously. Whether it’s a new year, a new month, or a random day and you’re feeling motivated to change—you’ve got this. Be intentional and get ready to work on making your dreams come true.