With a New Year here, and many people taking time to think about what goals they have for the New Year, money is usually towards the top of the list. From saving more to spending less, financial resolutions for the New Year come in every shape and size. However, we have found that the New Year is a great time to go back to basics with your finances.
Revisit (or Create) Your Budget
Everyone should have a budget. Now is a great time to create one if you haven’t already. If you have created one in the past, take some time to revisit it and see if it’s working for you. Ask yourself these questions:
Was there any area that I consistently overspent?
Am I reaching my savings goals?
Do I need to reallocate money to different areas of expenses?
Do I need to cut back spending in any one area?
Creating or adjusting a budget can help give you a plan for being financially sound.
Build an Emergency Fund
If you don’t have an emergency fund, this is one of the first savings goals you should have. In an ideal world, an emergency fund would be enough to cover 3-6 months of expenses. This is there for when you have large, unexpected expenses that come up, or if you are making less money and need to cover expenses.
Not only will building an emergency fund be there when you need it, but it can actually help you live a more stress free life. According to a recent study, having cash available is a better prediction of life satisfaction than raw earnings or investments.
Assess Your Debt
This time of year is also a great time to assess your debt and take action beyond simply a plan to pay it off. If you have a mortgage or a car loan, perhaps refinancing it could get you a better interest rate. This could be especially true if you have a variable rate mortgage. Additionally, if you have credit card debt, call your credit card company and ask them to lower your interest rate on your card. If you don’t have debt, ask them to raise your credit limit. You might be surprised to see how willing your credit card company is to work with you.
If you have questions or need any help, feel free to reach out to one of our Member Advisors, or give us a call at 800-835-3400. We are here to help you on your financial journey.