Did your midnight toast include a resolution to improve your financial health?
2018 gives you the opportunity to start anew and simplify your financial life. We’ve put together some tips to help you keep up with your bills, track your spending, and really use your money for the things you really want. This is what you should do.
Have a strict budget
If you want to get ahead of your finances, it’s extremely important to know where you stand and create realistic strategies to achieve your financial goals and objectives now and in the future. You may think budgeting is old school, but it’s still the best way to map out ways to help you manage your income and expenses. If you already have a budget, be sure to review it to make sure it worked effectively for you in 2017.
Don’t make budgeting time consuming or complicated. All you have to do is download a budgeting app on your mobile device that allows you to keep track of your spending. When we say track your spending, we mean everything you buy with credit cards, debit cards, and cash. What you’ll find even after a month of tracking is the truth about where your money is going so you can plan for future spending.
Check all your statements
Be sure to set aside time each month to review all of your bills and statements. This is a good time to look for things you’re paying for but no longer need, or especially things you can cut back on. A good online app that can help uncover interest rate increases or additional fees or even auto-renewing subscriptions is Truebill.
Check out your credit union’s online money management tools
Credit unions offer online tools to help you with your financial management. How can I save for that cool sports car, dream home, or toys for the kids? How much down payment do I need to save for that shack on the shore? What type of investment is best for me? Play with their calculators to make your financial decisions easier. And if you want to set a budget and track your spending, check out your FREE personal financial management software that can add up all your financial relationships and help you set goals.
Financial calculators will help you understand APR, APY, repayments, and the power of money. Simply go to your credit union’s website and select a category that interests you:
Always prepare for the unexpected
As we all know, life can throw you some curveballs. Life’s challenges, like losing a job or medical problems, can leave you drowning in a sea of debt. As you’ve probably heard before, it’s essential to create an emergency fund that can cover three to six months of expenses. Even if you can save just a little each month, you can build a cushion of financial protection.
free yourself from debt
Are you that person who makes only the minimum payments on your credit cards or other major debts? Did you know this means you’re paying mostly interest and barely cutting any current balances? An effective method of reducing debt is to focus on your highest-interest balances first, while making smaller, more timely payments on all other commitments. When you’ve paid off your high-interest debt, focus on the most expensive remaining balance and continue in this manner until you’re debt free.
When your financial obligations are really out of control, combining your debts into one payment can provide the relief you need. Simplifying multiple debts into one lower monthly payment can help you pay your bills sooner. Your options include home equity, personal loans, and interest-free credit card balance transfers.
Make the most of tax deductions
Taking advantage of the appropriate tax deductions can help you avoid paying more tax than is absolutely necessary. You may qualify for tax deductions including:
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Interest deductions for mortgages, home equity financing, business financing, and student loans.
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Deductions for taxes already paid, including sales tax, foreign taxes, and self-employment tax.
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Business and home office insurance deductions.
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Deductions for charitable donations.
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Pre-tax contributions to IRAs and 401(k) plans.
Open another checking account for intermittent expenses
If you have bills that appear periodically, such as insurance payments, quarterly taxes, etc. Open a second free account at your credit union and use it to store money for those sporadic payments that come quarterly or even annually. For those intermittent payments, it is good to save a part of those payments each month and when you need to make those disbursements it will not strain your finances.
Reassess your assets and investments
Life can change quickly, so it’s important to review and change your retirement accounts regularly. It’s also smart to review your estate plan and make sure your will, insurance policies, and beneficiaries are up to date.
Make sure you have money to spend
As you create the plan to maximize your financial goals, be sure to allow yourself money for incidentals like coffee, movies, or eating out. Remember, you can’t sacrifice everything to improve your financial health for the future.
Financial health = a happy life! So if you start the New Year off with a little financial cleanup, over time things that used to seem out of reach will seem to become affordable, and every unexpected expense won’t be catastrophic. By following these tips, you can build your future to fit your specific needs. The changes may be gradual, but by this time next year you’ll be able to toast your financial well-being.
