Next to physical health, financial health is at the center of many Americans’ New Year’s resolutions. If you’ve resolved to finally get your finances in check this year, use these tips to save more, spend less, and make this your year!
Like other lofty goals, taking small, manageable steps in the right direction is going to be the key to actually succeeding. And just like other improvements in one’s life, deciding to make a change is the biggest hurdle to making a difference.
1. Save Wherever You Can
A person’s financial health depends on many factors, not the least of which is their ability to pay for emergencies out of savings rather than cash flow. So how do you boost your savings on regular basis?
First, decide on the portion of your tax return, bonus, or financial windfall that will go to your savings account and what will go toward paying off any debt you may be carrying. Second, slide some of your income into savings before it even gets into your hands. Use payroll deductions from St. Cloud Federal Credit Union to put a portion of your paycheck directly into savings.
2. Get on the Same Page as Your Spouse
According to a study by SunTrust banks, nearly half of all respondents have different spending habits than their partners, which is why this made our list. It is difficult to reach financial goals as a couple if you don’t agree on the goals or how to get there. Not to mention that financial stress is the number one cause of marital stress for those who indicated stress in their relationship.
Sit down together and take stock of where your finances are. Make the following decisions together:
- Decide what you’d like to accomplish in the next year, whether it’s paying down debt, opening a college savings fund, or just keeping monthly spending to a specific and firm budget.
- Decide who is best to manage your finances. If the current arrangement isn’t working, think about having the other person step in.
- Set your budget and make a plan to stick to it. That brings us to the next suggestion.
3. Watch Those Little Purchases
Whether you’re single or attached, make a budget. Look carefully at your monthly and yearly income, and where it was spent last year. Are you happy with what you see? Is it what you expected?
Setting a weekly and monthly budget with spending caps can help you reach your year-end goals. Watch those little purchases that may have made up more of your spending than you thought, such a parking, eating out, coffeehouse visits, or traffic tickets. Although they seem small at the time, adding these small tickets to your burden every single week or month will end up creating a big hole in your financial plan.
4. Watch Those Big Purchases
Ah, the splurge. Whether it was a Christmas gift or a mid-winter vacation, one large purchase outside the scope of your budget can throw things off for months. Discuss these big ticket items with a financial advisor to proactively set a plan for achieving it. Americans often have a habit of buying first and thinking about it later, which is a sure way to rack up debt. Shop around, compare prices, check your impulses, and remember that it’s ok to say no to yourself in favor of your greater goals of financial freedom.
5. Check Interest Rates
If reducing your debt is one of your goals—and if you have debt, it should be—look at the interest rates you’re paying. Get rid of the balances that carry the highest rate, and work down from there. If you’re not sure where to start, this is one strategy for tackling debt.
Similarly, compare interest rates for savings accounts and money market accounts. Talk with a representative at St. Cloud Federal Credit Union to determine if the money you’re saving could be earning you more.
6. Plan for Retirement
According to the 2016 Financial Literacy Survey, one-quarter of Americans don’t save any of their annual income toward retirement. Lauren Brouhard, Senior Vice President of Retirement at Fidelity Investments, recommends saving 15% of your income to ensure a comfortable retirement.
If you haven’t opened your 401k retirement plan or checked in on its performance, do that immediately. If your employer offers a matching contribution to your 401k, be sure to take advantage.
For assistance with any of these tactics, we encourage you to let St. Cloud Federal Credit Union help you maintain this year’s New Year’s resolutions!