With a new year comes new resolutions. What most people don’t consider are the resolutions to keep their finances in check, because eating healthier and exercising more often seem more important. While those two resolutions certainly have their merit, it’s also vital to have a healthy financial plan.
Here are five tips from Coastal Credit Union for starting your year off on the right financial foot!
Tip #1 – Have a Budget
How many of you reading this actually have a budget, one that you stick to? If you’re one of the few who can’t live without one, good for you! But, for many of us, having and maintaining a budget is quite a task. The good news is, it doesn’t have to be!
Today, many financial institutions offer budgeting tools within their online software. Coastal has partnered with Accel Members Financial Management to offer BudgetSmart’s customizable software tool. There are other tools out there, like Mint and Quicken, or you can just use a simple Microsoft Excel spreadsheet. Excel even offers templates you can customize for your budgeting needs.
Whatever tool you use, make sure you create and keep a budget. That should be your first priority!
Tip #2 – Start and/or Maintain Your Emergency Fund
Many people don’t realize the importance of having an emergency fund. The thing is – you need one. We all do. While having an emergency fund is normally thought of as a short-term goal, it has long-term benefits.
If you don’t have an emergency fund, just start by putting as much away as you can per month until you build up the fund. If you don’t know where to begin when it comes to building an emergency fund, don’t worry. Coastal’s Save for a Rainy Day Calculator can help you determine just how much you need to save.
Tip #3 – Re-Assess Your Retirement Plans/Goals
2020 turned out to be the year of uncertainty, especially after the market volatility surrounding the COVID-19 coronavirus pandemic that began in early March. You can count on market swings to challenge your patience as an investor, but neither the ups nor the downs last forever, even if they feel as though they will.
January is a good month to take a look at your current retirement plan and to make changes that could maximize your earnings to achieve your goals. If that means you increase your 401(k) contribution by 1%, convert your existing Traditional IRA to a Roth IRA, or something else altogether, the important thing is you’re adjusting your strategy to increase the likelihood you’ll have more saved for retirement.
Whether you are just getting started, or you already have an established retirement plan, Coastal’s Retirement Planning Program can help you along your retirement planning journey. Their financial advisers can also help you develop a personalized retirement plan, which aligns with your values and goals for the future.
Tip #4 – Implement a Plan to Get Out of Debt….Faster
Most of us carry some kind of debt – credit card, mortgage, and car loans, even loans from your parents or grandparents. As you’re creating your budget, include line items that reflect that debt. Perhaps start a savings account specific to paying down debt. Also, whatever “extra” cash you expect to get throughout the year, put that money toward paying down your debt.
While it’s more fun to spend, you’ll thank yourself, because getting out of debt really is a beautiful thing.
Tip #5 – Have a Plan for Rewarding Yourself for Reaching Your Financial Goals for the Year
Seriously, why do all this work without reaping a reward or two? Come up with a rewards plan as a way to celebrate when you meet your financial goals for the year. For instance, say your goal is to pay off your school loan by September. While you are paying it off, put some money in another savings account each week towards whatever your reward is.
Whether you choose to reward yourself with a weekend away without the kids, a day at the spa or those shoes you’ve had your eye on, you will have earned it!
This article originally appeared on Coastal Credit Union’s financial education blog. It is reprinted with permission.
