It’s a brand new year, which means it’s time for new resolutions! Eating healthier and hitting the gym are great life changes to make, but having a healthy financial plan can be equally as important. Here are 5 tips for starting your year off on the right financial footing!
Tip #1 – Have a Budget
If you’re one of the folks out there who already sticks to a budget, that’s great news! But, for many of us, maintaining a budget can seem like quite the burden. It doesn’t have to be! Today, many financial institutions offer budgeting tools within their online software. Coastal is no exception. We have a tool within our Digital Banking platform where you can easily track your income and expenses!
There are other tools out there like Mint and Quicken. Or you can use a simple Microsoft Excel or Google Sheets document. Both Excel and Sheets offer templates you can customize for your own budgeting needs. Either way, creating and keeping a budget should be a top priority!
Tip #2 – Maintain an Emergency Fund
Some may think this is a no-brainer, but if you’ve never had a budget or are living paycheck to paycheck, having an emergency fund is not something you generally consider. The thing is – you need one. We all do. It’s that safety net that’ll be there in case you fall.
If you ask a financial advisor how much you should have in your emergency fund, their answers may vary. But for most, they’ll tell you to have at least three months of funds in it to cover your living expenses (mortgage/rent, electric, water, loan payments, groceries, gas, medicine). That may seem like a lot, but you never know what emergency could come up at a moment’s notice.
If you don’t have an emergency fund yet, start by putting as much as you can per month into your savings account until you build up the fund. Then don’t touch it…unless it’s an emergency!
Tip #3 – Re-Assess Your Retirement Plans
January is a good month to take a look at your current retirement plans/goals to see what changes you could make to maximize your earnings towards them. Whether that means increasing your 401(k) contribution by 1%, investing in a Roth IRA, or something else altogether, the important thing is having a well-thought-out strategy and adjusting it if need be. That may increase the likelihood you’ll have more saved by the time you reach retirement age. Better yet, maybe you’ll be able to retire early!
Tip #4 – Implement a Plan to Get Out of Debt
Most of us carry some kind of debt – credit card debt, mortgage, car loans, even loans from your parents or grandparents. As you’re creating your budget, include line items that reflect your debt. Perhaps start a savings account specifically designated for paying down debt. Also, whatever “extra” cash you expect to get throughout the year (bonuses, birthday money, gifts, etc), put that money towards paying off your debt.
While it can be more fun to spend, you’ll thank yourself in the future. Becoming debt free is an important step to financial freedom!
Tip #5 – Reward Yourself for Reaching Your Financial Goals
Why do all this work without reaping a reward or two? Whether that reward is a small one (a night out at the movies) or larger (that dream vacation you’ve been dying to take), don’t be afraid to reward yourself. That doesn’t mean you go spending like crazy. It just means that you work towards that reward.
For instance, let’s 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. A weekend away without the kids or a day at the spa can help spur you towards reaching other financial goals.
With all of this saving advice, it may seem difficult to find room for rewards. It’s not. Look at what expenses you could live without. For instance, do you really need that Starbucks latte every single day? Redirect the money you would’ve spent toward your reward for achieving your goal.
It can seem daunting trying to take control of your finances. But the important part is to take those first steps. So this year, as you’re writing out that resolution to learn a new language, don’t forget to also put a little something about your finances. Let’s get 2020 started on the right financial footing!