10 finance resolutions for the new year
The holidays leave many people financially strapped, but now is the best time to get back on track. No matter what your big goals are for 2014 — buying a house, taking a vacation or just fattening your savings account — they key is to plan. Financial journalist Richard Satran partnered with McGraw-Hill Federal Credit Union to share these tips.
1. Do an inventory. The first step is sitting down and understanding your spending habits. Figure out how much you’re making after taxes and what you’re spending it on. You might be surprised at what you find out.
2. Start saving more money. After you understand how much you’re making and where it’s going, then you can figure out what you can cut down on. Can you trade cable for Netflix? Should you make a goal to move to a cheaper neighborhood when your lease is up? It might take some creativity, but there are always ways to save.
3. Set up automatic deductions. Now that you’ve found a few ways to decrease your spending, set up automatic payments into your savings account. That way, it’s done automatically and you learn to budget around it. Even if you can only afford to put away $20 more a month than you are now, it’s a start. You can always re-evaluate your finances again in a month and make necessary adjustments.
4. Keep your debt manageable. The first step to tackling your debt is to schedule a free credit review and assess your total debt. A lot of people want to pay off their student loans before their credit cards, but it might make more sense to do it the other way around. Credit card companies tend to charge high interest rates; the key is prioritizing the debt that costs you the most.
5. Plan for retirement. Even if you’re just starting your career, thinking about retirement should factor into your money plans now and every year. The easiest way to help yourself is to contribute to your company’s 401K. There are also private companies you can use if your company doesn’t offer a 401K payment plan.
6. Make a list of your long-term goals. Think about what you want for yourself and your family. Do you want to buy a house? Pay for your kids’ college? Write down your goals and the amount of money it will take to make these dreams a reality. Then, figure out what it will take to make it happen. Is it starting a house fund savings account and feeding it $100 a month? Figure it out and monitor your progress.
7. Get professional advice. There isn’t a one-size-fits-all finance plan that works for everyone. Sitting down with a financial adviser can help you find creative ways to cut costs, help you prioritize debt and learn ways to make your future goals a reality. Together, you could uncover opportunities you might not know you have.
8. Take a class. Many banks offer free seminars throughout the year to help customers learn more about managing money. It’s also a good way to learn about services your bank offers that you might not be aware of, like a rewards program or helpful app.
9. Keep good records. To keep all your new finance resolutions on track, it’s important to track your cash flow. Create physical or virtual folders with your real estate documents, medical records, insurance policies and wills, current loan documents and other important documents.