I'm busy working on my blog posts. Watch this space!
Start Your Financial Resolution Right
January 12, 2017
New Year’s Resolutions are easy to make, yet difficult to maintain. Most Americans resolve to better themselves in some way….lose weight, quit smoking, volunteer, reduce stress, eat better, work less, travel more, save money. The list goes on and on, but how often do Americans abandon their resolution after only a few short weeks because they are too difficult to keep up with our busy schedules.
This New Year pick a resolution worthy of sticking with, your Financial Resolution!
Here are the Top 7 Ways to Keep Up with your Financial Resolution:
#1 Seek Advice from a Professional
Most Americans don’t know where to begin when they are interested in planning for their financial future. This is a great opportunity to seek the advice of a professional. A financial advisor can assess your financial inventory, develop a realistic, comprehensive plan to meet your financial goals, and help you stay on track even as your personal circumstances evolve and change. Set up a free consultation with a tax professional.
#2 Adjust Your Withholdings
Check your year-to-date withholding and consider changing the taxes withheld. You need to decide if you would prefer to have extra money withheld to get a bigger tax refund, or if you prefer to have a smaller refund next year and more take-home money now. To make this adjustment, you will need to complete Form W-4, Employee's Withholding Allowance Certificate, to adjust the amount of taxes withheld and submit it to your employer.
#3 Maximize Your Retirement Plan Contributions
Many employers offer a 401(k) plan or other type of deferred pension plan, make every effort to contribute the maximum amount for your retirement. If your employer matches your contribution, you should at least contribute the matched amount. Think of your employer’s contribution as an immediate 100 % return on your financial investment. Even when your employer does not match your contribution, your funds re tax-deferred and grow tax-free.
If your employer does not offer a retirement plan, then contribute to a Roth IRA or a traditional individual retirement account. A Roth IRA often offers a tax deduction for the contribution year and both options offer tax-deferred gains.
#4 Automate, Automate, Automate
The most efficient way to keep your financial goals on track is to automate your payments. Many Americans automate their bill payments, but don’t think about automating their savings in the same manner. Automatically transfer a portion from each pay period into your savings. Also, many banks can automate transactions, such as automatically transfer $100 into your savings every time a deposit of more than $500 appears in your checking account. If you automate your savings, it is easier to achieve your financial goals.
#5 Track Your Budget
Start the New Year off right by creating a budgeting system to identify your income and expenses. Total each separately and compare your totals to make sure you are not spending more than you are earning. If your expenses are more than your income, you will need to make some adjustments. Once you have created a budget, stick with it including depositing money into your savings.
#6 Reduce Your Debt
In order to reduce your debt, you need to identify all of your debt. Create a list of all of your debt including balance, interest, penalties and late fees. Now that you have identified your debts begin tackling them by paying your minimum payment every month on all of the accounts. Determine that account that has the largest rate/balance and begin paying as much as you can afford based on your budget. Once this debt is paid off, use this same approach to tackle the next debt. Continue this process until you are debt free.
#7 Check Your Credit Report
The New Year is a good time to check your credit history. Your credit is a critical part of a solid financial plan. Your credit report contains vital information regarding your past and present credit transactions and is used to determine your creditworthiness by potential lenders. Some employers review your credit report as a prerequisite for employment. A positive credit history is needed to obtain credit especially if you are seeking the lowest interest rate.
Review your credit to take steps to improve your credit history or fix any inaccuracies. In order to maintain or rebuild your credit, make sure you make your monthly payments on time. You should also avoid having too many inquiries on your credit report. Keep in mind that every time you apply for a line of credit, an inquiry has been made on your credit report. You are entitled to a free copy of your credit report once a year from each of the 3 major credit reporting agencies. You can go to www.annualcreditreport.com for more information.