Many of us have started the New Year resolving to do something different with our finances. Although this may seem like a daunting (and challenging) task, with a few simple steps you can help yourself to a prosperous 2018.
Set a financial goal. Whether your financial dream is to save more for retirement or finally afford to take your dream vacation, it’s important to understand your goals. Think short-term as well as long-term. Document your goals somewhere, whether it’s electronically or in your favorite notepad. Keep in mind, the more specific your goals are, the better. And don’t forget- make sure they are SMART goals: Specific, Measurable, Achievable, Relevant, and Timely. A goal to save for that trip to Switzerland can be made SMARTer with a little more detail. For instance, you could write “ Save $3,000 total for the Switzerland trip by putting $250 monthly into my travel savings account for the next 12 months.”
Make and stick to a budget. In order to make your dreams a reality, you will need a budget, one that takes ALL your expenses into account- even expenses that are only paid quarterly or even once or twice per year such as property taxes. Some financial experts like to utilize the 50/20/30 rule, which basically says no more than 50 percent of your income should go toward essential living expenses (like housing), no less than 20 percent should go to your financial priorities (such as saving for retirement), and no more than 30 percent should go toward your lifestyle (like shopping, clothing, and entertainment). However, don’t be afraid to come up with your own framework and what works best for your situation.
Track your spending. Nowadays, there are so many ways you can keep your financial goals in check throughout the year. Whether it’s by using a separate spending account, using your favorite budgeting app, or simply using your credit union’s amazing financial planning and budgeting tools available in Online and Mobile Banking, there are tools out there to help you succeed.
Open a retirement account (if you haven’t already). If your employer offers you the opportunity to contribute to a 401(k)- great! We sincerely hope you are taking advantage, especially if they match your contribution up to a pre-determined percentage. Can you say free money? If they don’t, no need to fret! You can still put aside money for retirement by contributing to an Individual Retirement Account (IRA). Just like a 401(k), an IRA is a personal savings plan exclusively for retirement with some possible tax advantages. Learn more about IRA’s here.
Set up automatic transfers into a savings account. Setting up weekly or monthly automatic transfers will not only shave off the mental burden of having to remember to transfer funds, but also keep you on track. In fact, it’s probably best if you automate as much of your budget as possible, including any payments you may have.
Pay down high-interest debt. When it comes to paying off multiple debts, there are many strategies you can use in order to pay them off quickly and efficiently. While paying off your loan with the smallest balance first is a common approach, paying off the loan with the highest interest rate first will save you money on interest in the long run, meaning you come out ahead financially.
Transfer higher rate balances to a Sandia Area low-rate Mastercard. If you spread a little too much holiday cheer last year, and you’re now faced with a frightening high-interest credit card balance, consider transferring your balance to a low-rate Sandia Area Mastercard. And don’t worry, unlike other cards we don’t charge a balance transfer fee! That means all the savings go straight in to your wallet.
« Return to "Articles of Interest"