What’s Your New Year’s Resolutions?
Will 2017 be the year you stop biting your fingernails, start hitting the gym consistently AND cutting back on your double espressos? And could it also be the year you get serious about improving your financial health, which is as important as your physical and emotional wellbeing. Experts agree that money problems can often lead to struggles in your relationships as well as a decline in your sense of wellbeing and overall physical health.
Your money matters! We want to help you make the best choices – so you can enjoy a lifetime of sound financial wellbeing. With that in mind, we’ve identified some key areas to help you reach your financial goals in the new year:
Pay Yourself First
Opening a savings account is one of the most important steps you can take to becoming financially sound. A consistent commitment to making regular deposits is key to successful saving. The best way to get started is to open a savings account and establish automatic electronic transfers each time you get paid. When planning your budget, determine a set amount that you can commit to saving, and treat it like any other bill – with a predetermined amount and payment due date. Consider the “out of sight, out of mind” benefits of having it automatically deposited each payday. If you’ve never set up an account this way and it sounds a little overwhelming, you can start small. Once you establish a pattern of making regular payments to your savings account and are comfortable with the process, go ahead and increase your commitment. If you think you can commit to not touching it for at least 6 months and would like to increase the return on your deposit, we recommend an Advia EZ Saver CD (allows you to make deposits throughout the term).
Pay Others on Time
A great credit history will save you thousands (actually, it’s estimated to be hundreds of thousands) over your lifetime in lower loan interest rates and other reduced expenses. The number one factor that makes up your credit history (and approximately 35% of your credit score) is paying your debts on time. Many people wonder if it’s more important to pay a large bill ($1,000 mortgage) versus a smaller bill ($40 phone bill) on time. The answer: both are equally important. Regardless of the dollar amount, paying your debts on time is critical to a healthy score. The second highest ranking criteria that determines a good credit score is your credit “capacity” (this makes up approximately 30% of your score, and is the amount of available credit you have in comparison to the total outstanding credit held). Other less weighted factors tied to your credit score include the varying types of credit held (examples include mortgages, credit cards and auto loans) and length of time you’ve held credit in your name.
Make A Spending Plan Work for You
Spending is a part of life! It’s okay to spend – but it needs to be planned for and above all, you need to hold yourself accountable. Create a spending plan that allocates all anticipated income and anticipated expenses for the month. It’s smart to include the dates you need to pay bills so you’re fully prepared. Another smart move is to track EVERY expense for at least one month (two is even better) so you can see where your money is really going. It may be a surprise to see how you’re spending your money – and motivate you to consider ways to spend less and save more!
Prepare for Tomorrow (it comes quickly)
Longer term planning is just as important as saving for your short-term goals. You can try to ignore it but the fact remains that every day you’re getting one day closer to retirement. You may feel overwhelmed, but with a little planning, you can be ready! You also don’t have to go it alone, and the sooner you get started, the better. Your first step should be establishing and setting up automatic deductions (if offered) to a tax-deductible 401K through your employer. You should also consider an additional tax rewarding IRA (Advia’s Financial Advisors can help you learn more about the benefits of choosing either a traditional IRA or Roth IRA). Experts recommend committing 10 to 15% of your paycheck to long term planned savings.
Happy new year from your friends at Advia Credit Union. As you welcome the new year, and all year long, we are your advocates in helping you save money, quickly and easily. We are here for you, and look forward to bringing in a new year together!