With January dubbed as “Get Your Finances in Order” month, it is important to review financial strategies to get financially fit. It is especially important to start this now with the April 15th tax deadline approaching.
- First , we all tend to spend more than we should on holiday gifts. If you have the funds, the best option is to just pay it off before the interest fee hits. But that it not usually the case with most people so I would suggest the following:
- Make a Plan. Don’t wait for your credit card statements to come in before formulating your plan of attack. Gather all your holiday receipts and add up the amount you owe so you’re not shell-shocked when the bills start to arrive.
- Use Gift Cards Wisely. If you received gift cards for big box stores, Amazon, or general use gift cards like Visa or American Express, use those things to pay for expenses such as gas and groceries during the month of January. Dedicate the money you would have spent on those items to paying your holiday bills.
- Start Planning for Next Year. Want to avoid that holiday debt hangover next year? Start planning now! Set aside money each month in 2016 dedicated to buying gifts and paying for celebrations. Use Apps like www.acorns.com or www.digit.co that rounds up your purchase and then puts them in your savings account. Also, use the app www.retailmenot.com for special coupons in stores. For example, if you are in a particular store, you can check this app for any special coupons and use it for your purchases.
- Start an investment account. $18 /week = $1000 next December
- Second, create a month by month goal worksheet to accomplish a successful financial year. Forget New Year’s Resolutions. You have to accomplish your goals over a period of time. For example, I have listed suggested goals for twelve months below. Resolve to do just one thing each month to increase your odds for financial success and it should take you less than one hour of effort each month.
January: Review your 401K allocation & elections
February: Deal with credit card debt
March: Prepare your taxes
April: Plan your summer vacation
May: Shop all your insurances’ (home, auto, umbrella)
June: Start a holiday account
July: Check your credit reports
August: Round up your mortgage payment
September: Estimate your retirement needs
October: Study your benefit elections
November: Revive your Will & Living Trust
December: Make your list and check it twice
- What do you do when you are debt free? Many debt free people do not prepare for the future. Emergencies can occur and retirement or college planning may be around the corner. Here are a few suggestions:
- Build up your emergency fund. If you pay off all your debt, you should prioritize a hefty emergency fund. Not having an emergency fund can seriously affect your finances even if you are debt-free, because if a big enough financial emergency arises, using your credit cards without having the money to pay them off can quickly put you back in debt. I suggest you put aside six to eight months’ worth of bills — and more, if you can. Use the www.acorns.com app to help save a few extra dollars in your savings each week without even missing the funds.
- Save for retirement and possible college expenses for children. You should start saving for your retirement and possible college expenses as soon as you start working, but once you are debt-free, this should be one of your primary focuses. In addition to investing in any plans that your employer matches, you should also consider trying to bulk up your retirement savings by making smart spending choices. Also, if you have money to contribute for the first time in your life, consider meeting with a financial planner who can discuss different retirement savings methods with you.
Don’t be scared, be prepared!