With the New Year upon us, and with many resolutions made (and some already broken…), it’s a great time to plan your budget for the year. If you are like most people, you probably spent more money than you expected over the holidays. Take this opportunity to set your finances up for success in 2015!
Revisit Your Budget
Now is a great time to sit down and revisit your budget for the New Year. If you don’t have one, it’s a great time to create one. When looking at your budget, consider where you overspent and where you didn’t spend as much as you thought. Did you meet your savings goals? Did you meet your goals for paying off debt? Did you get a raise? Take all of these into consideration and adjust your budget for 2015.
Where would you like to be at the end of 2015? Is it being debt-free? Maxing out your retirement account? Getting more money in your emergency fund? Are you planning on buying a car or house this year? Do you need to start saving for your child’s college fund? Whatever your goals are, be realistic about them. Being overly ambitious will set you up for failure and could damage any good intentions you originally had. Instead, set goals that are reachable so you can feel good about what you’ve accomplished.
Build Your Emergency Fund
As you set goals, be sure to set aside money to put into savings for an emergency. A good number to shoot for is 4-6 months of living expenses. Not only would this be able to sustain you if you lost your job, but it also gives you a good cushion should unexpected expenses arise. You never know when Fido is going to need an emergency trip to the vet or your car will break down. Having this money set aside will give you the peace of mind that you have cash available should you need it.
Increase Your Retirement Savings
Everyone should have a retirement account. Whether it’s a 401k, 403b, IRA or another kind of retirement account, there could be potential tax benefits associated with each type of account (consult a tax advisor) . As best you can, try to max out your contribution to these accounts every year. This is especially true if your company offers any kind of matching contribution.
Pay Off Debt
If you have credit card or any other unsecured debt, make it your goal to pay it off this year. Because of the higher interest rates associated with this type of debt, as opposed to a mortgage or vehicle loan, it works towards your benefit to keep the balance on these cards as low as possible.
Setting some financial goals for 2015 can help you feel more confident about your finances, allowing you to plan for the future. If you have any questions about how to get started with these types of goals, please contact one of our Member Advisors at 800-835-3400. We look forward to helping you on your financial journey!