Ringing in the New Year is a great time to set financial goals and reflect on how you managed your money last year. It’s not always a “fun” task, but it’s a vital one. This year, relax and have a “financial readiness” date night to focus on a few specific goals for the new year. Here are a few to get you started:
Spend Less: We all have essential monthly expenses we focus on, like rent, mortgages, car payments, groceries, child care, and others. But, how much are we spending on these items? If your budget requires more than 50% spending in this category, it’s time to set a goal to reduce these expenses. How do we make that happen when some of these expenses are “fixed?” Clip more grocery coupons, turn your thermostat down a few degrees to lower the bill, ask for discounts on cell phone plans, and bring your lunch to work. These small changes add up, and over time, can bring these regular expenses below that 50% mark!
Save More: Once we’ve reviewed our expenses, the next step is to set a goal to save more. Often times, we look at saving money in a pretty unorganized way–like simply committing to put an extra $50 in the bank here and there. But this often yields unorganized results. So, take a look at your budget and commit to a monthly or bi-monthly savings goal that works for you and your family. Don’t set a goal that’s too strict or large to stick to, simply focus on one that works within your budget and schedule regular automatic transfers from your checking account into the retirement or savings account you select. If you don’t see it, you’re much less likely to spend it!
Pay Down Debt: Most of us have a variety of debt, like student loans, car loans and credit-card balances. Don’t get overwhelmed as you make your monthly payments on these, and commit to a new debt payment goal this year. Simply start with the debt payment with the highest interest rate first. Attacking that will pay dividends because it will save you precious dollars in interest each month!
Set Aside Money for Emergencies: This goal sounds straight forward, but many of us fail to plan for flat tires, broken water heaters, and larger, unplanned emergencies. Commit to setting aside money for emergencies each month and aim for a cash reserve that covers three to six months of expenses. It sounds like a large chunk of change now, but if you chip away at it by saving money each paycheck, it will add up quickly!
Create a Budget and Stick to it: Navigating your finances without a budget is like finding your way to a new duty station without a GPS. Prevent a series of financial wrong turns by creating a financial roadmap that works for you. Analyzing every penny isn’t necessary, so just focus on essential spending (housing, groceries, etc.), savings, and debt reduction. That’ll give you a great start and over the course of the year you’ll build some confidence in your budgeting savvy too!
No matter where the year takes you, your financial goals should come along, so taking the time to create ones that work for you is truly priceless!
Are you planning to tackle your finances this year? What tips do you use?
Posted by Meredith M. Lozar MHR, AFC, military spouse