Get Financially Fit!
This is a perfect time to set new goals – to become more physically fit, read more, or get organized. It’s also a great time to assess your finances, gain control, and stick to a new budget or saving plan. Taking control of your personal finances will allow you to save and prepare for unexpected expenses. So, it’s time to get financially fit! Here are some tips to get started:
Get Organized
How about treating yourself to a post-holiday gift of a financial organization system? Alphabetized file folders or filing systems specifically for financial organization are available in January as people begin to prepare for tax season. Check your local office supply store for special offers. While you’re at it, you may consider purchasing a shredder to keep your personal information safe from identity theft. There are also roller stamps that blot out personal information on bills and other forms where you don’t want your information to appear.
Create a Budget
I’ve talked before about the importance of creating a budget – track your income and expenses to see how much money you have coming in and how much you spend. If you have debt, establishing a budget will help you to pay down your debt while saving. You can use computer software programs or basic budgeting worksheets to help create your budget. Include as much information as you can and review your budget regularly – that will help keep you on track.
Lower Your Debt
Debt from student loans, mortgages, and credit cards is nearly unavoidable. Did you know that most families carry about $10,000 in credit card debt? Spending more money than you bring in can lead to financial stress. Try to pay more than the minimum due and be sure to pay on time. Pay off debt with higher interest rates first. Transfer high rate debt to credit cards with a lower interest rate.
Save for the Unexpected and Beyond
Pay yourself first. Saving is important; it ensures a comfortable future that can endure financial surprises. No matter how old you are, it’s never too late to begin saving. Save at least 10% of your income for retirement. Enroll in a retirement plan or consider optimizing an established retirement plan. Contribute at least the maximum amount that your employer will match (these types of contributions are tax deductible). Think about an Individual Retirement Account (IRA) if your employer doesn’t offer a retirement savings plan. Keeping about three months’ salary in a savings account is recommended for financial emergencies, like hospital bills or loss of a job. Finally, if you receive direct deposit at work, ask your employer to send a specific amount to your savings account (or set up an automatic transfer from your checking account to your savings account).