A new year is just around the corner! Have you taken any steps to prepare for the financial realities of the coming year? Here are some tips to get you started:
TUNE YOUR BUDGET
It is great to start off the new year with a plan. A budget is just that – a plan that starts with the income you expect and your fixed expenses such as your mortgage, insurance, and utilities. The plan incorporates your savings goals, and the remaining money is designated for your other expenses. A realistic budget will help you set your financial goals and it will remind you to stick to them.
Try assessing last year’s budget, or create a new one if you don’t yet have one in place. Reviewing how you spent last year’s money will help you make better financial decisions for the year ahead. Incorporate a method for tracking your spending. You can do this on a spreadsheet or tag items in your checking account.
Even with a solid plan, there can be surprises along the way, so be sure to build an emergency fund into your budget.
Each set of goals requires a different method of planning and saving. Financial planners recommend setting up a separate savings account for each goal. This way, your progress toward that goal is clear.
It is best to work backward for determining how much money you need to save for each goal. Determine the cost of your goal and then establish a reasonable time-frame as well as how much you will need to set aside each month to reach it.
Make your financial future more secure this year by identifying your needs and wants. Your needs are necessary for survival and include food and shelter. Your wants are simply things you desire such as a luxury car. Tend to your needs first; and then, if there is money remaining, consider your wants. This might sound obvious, but for many of us, the lines between wants and needs are blurred.
MAXIMIZE TAX CONTRIBUTIONS
Tax deductions can be a valuable source of savings. If you have employer-matching funds available, take advantage of them. Also, verify with your HR contact and your accountant that you are contributing the optimal amount to your 401K and IRA.
PUT THE BRAKES ON HOLIDAY SPENDING
Avoid going overboard on holiday spending or you might spend the beginning of the year trying to pay it all back. Consider opening a holiday club account with DoverPhila Federal Credit Union. There is no minimum deposit required; and deposits can be made at any time and in any amount. Ask a credit union member service representative for details.
These are just a few of the many ways you can prepare financially for the coming year. With a little attention to some often-overlooked details, a little perseverance and a little mindfulness throughout, you’ll be moving forward with a strong foundation and positive outlook.
Need help getting financially organized, or maybe just a fresh perspective on how to handle your finances? Contact DoverPhila Federal Credit Union at 330-364-8874. We have on-staff financial counselors that can help you reach your financial goals.