Are you Financially Fit?

How are you doing on those financial New Year’s resolutions?  Are you making progress?  Have they fallen by the wayside?  Has life just gotten in the way?

While most people may really focus on making changes to your personal finance habits at the start of a new year, it is never a bad time to take a moment and assess where you are, regain control (if needed) or start a new budget or savings plan.  The tips below can help you get and stay financially fit.

• Get organized.  Having an organizational system of some sort for your finances is always helpful.  Whether you utilize alphabetized file folders or a digital filing system or spreadsheet, having your finances organized will help you see what is going on and can be helpful when preparing for tax season.

• Create a budget.  Step number one in creating a budget is to track your spending and income.  You must know how much money you have coming in and where it is going.  You can then use computer software or a basic budgeting worksheet to help you plan your budget.  Include as much information as you can and know that adjustments will need to be made as you go forward. 
  • Be sure to take into account fixed payments (e.g. rent or mortgage, car payments, student loans, etc.); variable payments (often utility bills, credit card payments, etc.); and ongoing expenses (fuel, groceries, entertainment); and irregular expenses (gifts, medical expenses, donations)
  • Set realistic goals.

• Pay yourself first.  Saving is important and should be factored into your budget as you prepare it.  It is recommended by many to have at least six months’ worth of expenses in a savings account in case of a financial emergency.  No matter your age, it is never too late (or too early) to start saving.
  • Waiting until the end of the month and saving what is ‘left over’ is never a good plan.  Determine in advance what you will save each month and have a specific account for it to go into.
  • Know your savings options – savings accounts or investment accounts.

• Take advantage of technology.  There are a plethora of tools available to help you track spending, save automatically and more. 

• Lower your debt.  As of year-end 2020, the average American household total debt was approximately $145,000 total (including all debt categories) and approximately $6,200 in revolving credit card debt.  Debt can become a major cause of financial stress.  Consider taking steps to cut your debt load.
  • Pay more than just the minimum payment each month, and always pay on time.
  • Start a plan to pay off debt.  There are a couple of strategies out there depending on your goals.  Take a look at the debt snowball or avalanche payment plans.
  • Transfer or refinance debt with high interest rates to lower rate options if available.

Just like physical fitness, financial fitness is an ongoing process – never quite done.  These are just some basics to help you get a handle on your finances and start, or help keep you, on your path.  You can check out more financial literacy tools and articles on the Financial Literacy page of our website.  Or, stop by one of our locations and let us help you on your journey.