2016 is just around the corner, and that means you’re probably making your New Year’s Resolutions. Bob Wamhoff, President of Wamhoff Financial Planning & Accounting Services, outlines the financial resolutions to consider for the new year.
- If you’re not doing so already, contribute enough to at least get the employer match, if offered.
- Raise your level of savings. Try to increase by 1% each year, or contribute some of your year-end bonus to your 401k.
- If you have an old 401k plan, do not forget to roll it over into an IRA on into your new 401k plan at your new employer.
- Consider a target amount that you would like to pay off throughout the coming year. Be specific. For example, set a goal of putting $200 each month towards paying your debt instead of just saying “I want to pay off my debt.”
- Make a list of all debts and prioritize which debts to pay off first depending on balance, interest rate, etc.1
- Create an emergency fund – general rule of thumb is 3-6 months salary.
- Compile a list of fixed expenses that you know will come every month (mortgage, utilities, food, etc.) and determine an amount that can be allocated to pay off debt.
- Categorize your monthly expenses and evaluate where changes need to be made if necessary to lower your monthly expenses2.
- Consider using free platforms such as Minto.com to track spending, income, and help in creating a proper budget.
- Evaluate your credit card company and/or bank. Are there other companies that offer better rewards, lower fees, increased protection, etc.?
- Consider setting up direct deposit to allocate a certain amount of your paycheck to a savings account. This can be used for emergency funds, vacation, or other financial goals (“out of sight, out of mind”)3.
- Use cash for smaller purchases. Studies have shown that people spend less when they use cash over credit.