By Celeste Lohrenz
As we reach the end of what has been nothing short of a challenging year – and hope 2021 will bring good news – it’s time for the age-old tradition of making New Year’s resolutions. Most people, though, don’t follow through on them. But, the key to making them stick is to make resolutions that are specific enough and achievable and, importantly, beneficial. If you have a vested interest in keeping your resolutions, you’ll be more likely to do so.
Taking stock of your financial situation is a great place to start. Then, you can look at where you may need or want to make changes in your spending or saving habits to improve one or more areas of your personal finances. You can certainly do these things at any time, but if you need a little additional motivation, try making a financial New Year’s resolution and see how it changes your financial outlook by this time next year. It’s something you have control over, and improving your finances will have short and long term benefits. Here are a few suggestions.
Stick to your budget
One of the most important tools for financial responsibility is your budget. Without one, it can be difficult to manage your spending and increase savings. If you haven’t created a budget, start with understanding your monthly spending, then you can start to build a budget and see how that relates to how much you want to save. If you already have a budget, review it to see if you can cut any spending to help save more. But, make sure you create a reasonable budget. If you set one that’s not realistic, you will not only fail to stick to it, but once you go over budget once, your spending can snowball quickly.
Check your credit report
Your credit score is a key factor in how banks decide whether to lend you money or not, and also what interest rates borrowers will get, which can all impact your ability to finance major investments, like homes or cars, or to get credit cards. You can see your credit score every time to log into your online account here at The Milford Bank. If there’s nothing suspicious and your credit score is strong, you won’t spend much time on it. But, if you need to improve your score or notice something wrong, make it a priority to fix it.
It’s easy to say you’ll eliminate all your debt, but it’s a lot harder to do it if you have significant credit card balances, auto loans, student loans, or other debt. Reducing it is much easier. Try setting incremental, more achievable goals, like paying off one loan at a time, or paying an extra $50 or $100 a month on your credit card. Even if you don’t pay it all off by the end of the year, you’ll have made significant progress that you can carry over into the following year.
Saving isn’t always easy, but using automated tools, like Plinqit, can help you reach your small and large saving goals by automating your savings deposits. Regardless of what you’re saving for – college tuition, a wedding, the down payment on a new home, or anything else – you no longer have to remember to put money away. Instead, set your goals and watch your savings grow each month.
Build an emergency fund
The thing about emergencies is you never know when they may happen. Your roof may start leaking, dishwasher may stop working, your car may need a new engine, or any number of other things may come up that require access to funds. That’s where having an emergency fund is can be a major benefit. Instead of dipping into your savings or accumulating debt, an emergency fund provides security for any unexpected situations that come up, including loss of income.
Save for retirement
It’s never too early to start building your retirement nest egg. It’s simple logic – the earlier you start, the more you are likely to have when you retire. Whether you have a 401k plan or IRA, try maximizing how much you put into it each month, while still maintaining a reasonable budget (especially if your company matches your contribution). You may also want to pay more attention to how your contributions are being invested. Talk to your financial advisor if you’re not sure how to effectively manage your investments.
Start banking digitally
Just about everything we do these days can be done online. If you haven’t yet tried online or mobile banking, you haven’t experienced the freedom and flexibility it provides. Most of your everyday baking transactions can be done through your bank’s website or mobile app, reducing the number of trips you have to make to the branch and giving you more time to enjoy doing other things. If you need help setting up your online account or mobile app, our bank’s specialists are ready to help.
Review your will
Nobody wants to think about it, but creating a will and making sure it’s updated as your financial circumstances change can be a huge help to your loved ones when the time comes. Take the time to meet with a professional to document how you want your assets allocated, and enjoy the peace of mind that you’ve made things a little easier for your family in the future.
These are just a few ideas for kicking off the new year with a positive financial outlook. Once you have assessed your current situation, you may find other ways you can improve your financial wellness. The key is finding something that makes sense while setting a goal that is achievable yet meaningful enough to make you want to follow through. Whether you’re looking at short-term benefit or long-term opportunities, you can’t achieve them if you don’t set objectives and create a path to financial success.