Vice President of Business First Bank
Every year, one of the top five resolutions is related to financial improvement. Typical financial resolutions include paying off credit card debt, planning for retirement or starting an emergency fund; however, by the end of the year, an average of only eight percent of people have kept their resolutions.
So, how can you stay on track in 2018 and achieve your financial new year’s resolutions?
First, if you don’t already budget, you need to establish a budget. This will take you roughly an hour, but is well worth the time to see where your hard-earned dollars are going. If you don’t know where to start, there are some great resources online such a Mint and Pear Budget. A budget will help you identify the areas where you can cutback or reallocate funds to achieve your resolutions. If you are struggling to find some savings examine the rates on your current loans. Refinancing your home and auto loans to lower interest rates can reduce your monthly expenses.
Next, examine and prioritize your resolutions. If you don’t have an emergency fund, then that should be your first-priority – above paying off debt and saving for retirement. Level Money is a great tool you can use to set savings goals and track spending.
Speaking of goals, you are 80 percent more likely to achieve a goal that is attainable than a vague resolution. Turn that resolution of paying off credit card debt into a goal that can be measured. The average American credit card debt now averages $16,000 which can be an awfully daunting task to take on in one year. Instead, break the total down into realistic goals and record your progress monthly to stay motivated.
Budgets, emergency savings and paying off debt all address the resolutions of today’s needs, but how do you start working towards saving for retirement? If you are under the age of 50, you can invest a max of $18,500 per year into your 401k and an additional $5,500 into an IRA (if your over 50 you can invest a max of $24,500 and $6,500 respectively). Having funds automatically taken out of your paycheck and invested into your 401k is one of the easiest things you can do to save for a retirement. These funds come out of your paycheck before you receive it, so you don’t have to worry about over spending. Even if you don’t have a 401k, you can still invest funds into an IRA account.
Remember, when it comes to reaching financial goals it is best to allow yourself some grace, don’t compare your financial situation or goals to anyone else. You can do this, just one small change in your current habits can lead to financial success in 2018.
Wishing you a prosperous 2018,