New Year, New Goals
Tips for a strategic and successful financial resolution
A brand-new year, always ripe with resolutions, is the perfect time to reassess your financial attitude, improve, and vow to do more. Here are some tips to get you started.
Tune your budget.
It’s a great idea to begin the New Year with a plan. A budget is just that – a plan that starts with the income you expect, along with your fixed expenses, such as rent or mortgage costs, homeowners’ association fees, insurance, utilities and transportation costs. The plan also incorporates your savings goals. Then, the money remaining is designated for your other expenses.
A realistic budget will help you set your financial goals and remind you to stick to them. Reviewing where you spent last year’s money will help you make better choices in 2018. If you did not save money for retirement, for example, this can be a new budget item.
Make sure to include a method for tracking your spending. You can do this on a spreadsheet or you can use a more robust tool, such as myMoney, coming soon for all Northeast Credit Union members.
Plan ahead to meet your goals.
Next, consider how you will accomplish your goals. You’ll have short-term goals, such as purchasing a new car or home, as well as long-term goals, such as saving for retirement. It can be helpful to set up a separate savings account for each goal. This way, you can easily track your progress.
Experts suggest working backwards to determine how much you need to save for a specific goal. Determine the total cost of the goal (car, vacation, down-payment on a home) and then establish the amount you’ll need to save each month based on the timeline. Make sure the amount you plan on setting aside each month is doable, or you may just have to adjust your timeline to be more realistic.
Maximize retirement contributions.
Retirement plan contributions can be a valuable source of savings, especially if you have the option of employer-matched funds. If you do, be sure to take advantage of them! Check with your HR contact or your accountant to make sure you are contributing the optimal amount to your 401K and IRA.
You can also make your financial future more secure by identifying the difference between your needs and wants. First, tend to your needs. Then, based on what’s left to work with, consider your wants. This might sound obvious, but for many of us, the line between wants and needs is often blurred. By clearly differentiating between what you want and what you need, you can make smarter spending choices and ensure you have the essentials taken care of.