As we say goodbye to 2021, many find this a perfect time to set new goals – both personal and financial – for the new year ahead. To help, we’ve come up with our top 7 resolutions for managing money more wisely in the new year. If you’re able to follow one or more of these, there’s a great chance you’ll end 2022 in a better financial place than when you started it.
One of the most important things to have in money management is a budget. After all, if you know where your money is going today, you can start making it go where you want tomorrow. But what’s more important than making a budget is sticking to it. That’s far easier to do if you cut yourself some slack and let yourself break it once in a while. Don’t look at your budget as an unalterable document. It is a fluent and changing list. Make sure you make room for enjoyable items (like going out to dinner, catching a movie or a show, etc.) to make it feel less restrictive.
How much should you save? $1,000 is a great start. That’s enough to cover a few pop-up expenses. But to stay safe in the event of a temporary job loss or unexpected medical bills, it’s good to have at least three months and as much as six months living expenses stashed away.
Speaking of savings, you’ll get there sooner than you think if you set up an automatic transfer from every paycheck. After all, you can’t spend it if you never see it. Just open a separate account and have a set amount directly deposited each month. It takes the planning and willpower out of it, you won’t have to remember to do it, and you may be surprised how quickly the dollars pile up!
If how much you owe is weighing heavily on your mind, there are few strategies to help make your load lighter. One is to consolidate debt. Combining a number of high-interest loans or credit card balances into one new loan with a lower interest rate makes it easier to pay debt down faster. Another strategy is the snowball method, which works well if your interest rates are similar. The idea is to pay off your smallest balance first, then roll that payment to the next smallest balance, and so on. This makes it easier for you to see progress quickly and feel good about your efforts.
If you get a raise or a bonus, it’s a good idea to use the additional funds to increase your retirement savings. The rule of thumb for contribution amounts is 12 to 15 percent of your salary, but if your company has a 401(k) you should at least try to contribute enough to get the full employer match. Failing to do so is kind of like turning down part of your paycheck.
If you have children, it’s never too early to start easing the burden of paying for college tomorrow with a savings plan today. Even if you start small, funding a 529 plan is a great long-term strategy because you can deduct your contributions from your state taxes and you won’t be taxed when you spend the money, as long as you’re using it for qualified education expenses.
Retirement accounts. Health savings accounts. Life insurance. Trusts. These are just some of the financial accounts for which people name primary and secondary beneficiaries. When we experience major life changes, it’s easy to forget to make the appropriate changes to beneficiaries as well. But doing so is important because your beneficiary designations may supersede any stipulations you have established in your will.
If you think one of these resolutions would help make your life better, grab a pen and write it down. You’ll be 42 percent more likely to achieve it if you do. And of course, if you need any advice or assistance, we’ll be here to talk whenever you’re ready. Here’s hoping the new year brings you health, wealth, and happiness!
Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen, or experience. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. Nothing in this communication is intended to be or should be construed as individualized investment advice. All content is of a general nature and solely for educational, informational, and illustrative purposes.
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42 Percent Reference:
https://www.inc.com/peter-economy/this-is-way-you-need-to-write-down-your-goals-for-faster-success.html