The New Year is an ideal time to set new goals, as many vow to become more physically fit or get organized. The New Year is also a great time to assess your finances, gain control and stick to a new budget or saving plan. Taking control of your personal finances will allow you to save and prepare for unexpected expenses.
Get financially fit this January. Follow the tips below to get started.
Get Organized Consider treating yourself to a post-holiday gift of a financial organization system. Alphabetized file folders, or filing systems specifically for financial organization are available in January as people begin to prepare for tax season. Take advantage and start the New Year with an organizational system. While you’re getting organized, consider buying a shredder to keep your personal information safe from identity theft.
Create a Budget Track your income and expenses to see how much money you have coming in and how much you spend. If you have debt, establishing a budget will help you to pay down your debt while saving. Use computer software programs or basic budgeting worksheets to help create your budget. Include as much information as you can and review your budget regularly. Print several copies of this budgeting worksheet to help you get started.
- Identify how you spend your money.
- Set realistic goals, especially if you plan to cut some of your expenses.
- Track your spending and review your budget often.
- Points to consider when cutting debt:
Lower Your Debt Debt from student loans, mortgages and credit cards is nearly unavoidable. Most families carry about $10,000 in credit card debt. Spending more money than you bring in can lead to financial stress. Establish a budget to pay down debts while you save.
- Pay more than the minimum due and pay on time.
- Pay off debt with higher interest rates first.
- Transfer high rate debt to credit cards with a lower interest rate.
- Use credit cards and loans for purchases that will appreciate in value like a home.
Save for the Unexpected and Beyond Pay yourself first. Saving is important; it ensures a comfortable future that can endure financial surprises. No matter how old you are, it’s never too late to begin saving.
- Save at least 10 percent of your income for retirement. Enroll in a retirement plan or consider optimizing an established retirement plan. Contribute at least the maximum amount that your employer will match. Contributions made to these types of plans are tax deductible. If your employer does not offer a retirement savings plan, many banks offer Individual Retirement Accounts. IRAs offer tax-deferred growth, meaning you pay taxes on your investment gains when you make withdrawals.
- Financial advisors often recommend keeping about three months’ salary in a savings account in case of financial emergencies like hospital bills or loss of job.
- Increase your contribution as your income increases.
- If you receive direct deposit at work, ask your employer to send a specific amount to your savings account. Because the money is put into an account before you have a chance to spend it, automatic savings plans are an easy and convenient way to save. If your employer doesn’t offer direct deposit, many banks allow for automatic transfers from checking to savings accounts.
Resource information provided by the American Bankers Association
It’s hard to believe there are only 8 days left until Christmas! For many people, it is important to take time during the holiday season to give to those who are in need. Donating to your favorite cause can be fulfilling, but it’s important to ensure that your gift reaches the intended source. Follow these tips to become a savvy charitable giver this holiday season:
- Give To an Established Charity
Unfortunately, there are fraudulent charities that will take advantage of your goodwill. To avoid this situation, ask for written information about the charity, including name, address and telephone number. A legitimate charity will give you information about their mission, how your donation will be used and proof that your contribution is tax deductible. Find a charity with a proven track record for providing aid.
- Designate Your Gift
Some charities allow you to specify exactly where your gift is headed, either to a specific orphanage, to purchase school supplies or to a geographic area in need of relief. By designating or earmarking your gift, you control where your donation goes and whom it helps.
- A Proactive Giver is a Smart Giver
Wise givers don’t give on an impulse or to the first organization that comes along. Smart givers take time to identify the causes important to them. Contact a charitable organization, find out their mission and what type of aid and programs they offer. Work with charities that have targeted outcomes for their giving.
- Benefits to You
A donor’s primary motivation may be altruism, but everyone knows there are great tax benefits for those who give. A donation to a qualified organization may entitle you to a charitable contribution deduction. Remember a contribution to a qualified charity is deductible only in the year in which it is paid, and all charities do not qualify for a charitable contribution deduction. Always ask for a receipt and save them for tax time.
- Consider Giving Your Time
Four out of five charities report using volunteers. Volunteers are the foundation of many charitable organizations. If you can’t afford to donate money, consider donating your time. Common volunteer duties include: stuffing envelopes, feeding animals, tutoring, building homes, serving as a museum docent, counseling those in crisis, selling tickets or answering phone calls.
Visit these other sites to find out more on charitable giving:
Resource information provided by the American Bankers Association
With the first day of fall officially behind us, it’s time to start taking advantage of all the things offered during this season. As the leaves begin to change, take some time to get outside and appreciate the cooler temperatures and scenery. We’ve listed a few fall favorites that won’t put a dent in your bank account.
- Take an extended bike ride. Autumn is the perfect season to enjoy the cooler weather with a bike ride. Get the whole family together and take in some of fall’s beautiful landscapes through your local park. Bring along a picnic and enjoy the sights and sounds. Leave the car at home and bike to your favorite farmer’s market. To get some ideas on where to go, check out this article on family friendly bike paths in Louisville.
- Visit a pumpkin patch. A fall tradition, visiting your local pumpkin patch is a must do for you and your family. Spend one day picking out pumpkins to decorate your home or carve later in the season. Make sure to pick a few extra pumpkins to try out these great recipes for fall.
- Get crafty. Even if you don’t consider yourself the “crafty” type, take some time this season to take part in some easy and inexpensive crafts. It’s a great activity to do as a family, and you can create a number of things such as decorations for your home and homemade Halloween costumes. This article includes great crafts to get you ready for fall.
As the holidays quickly approach, the American Bankers Association is encouraging consumers to plan ahead to avoid excessive debt in the New Year.
“Develop a plan in advance of the holidays, and be sure to check it twice,” said Frank Keating, ABA’s former president and CEO. “Assessing your finances and spreading out your holiday spending are terrific ways to avoid starting the New Year with debt you’ll regret.”
Below are seven holiday spending tips from ABA to help consumers have a financially happy New Year:
- Plan ahead. Before you start shopping, develop a realistic budget. Consider your income, subtract your normal monthly expenses and then add any savings to whatever cash is left over. If you need to use your credit card, think about what you can afford to pay back in January.
- Keep track of other costs. Don’t forget costs beyond gifts, like postage, gift wrap, decorations, greeting cards, food, travel and charitable contributions.
- Make a list and check it twice. Keep your gift list limited to family and close friends, noting how much you want to spend on each.
- Shop early, spend carefully. Avoid shopping while rushed or under pressure, which can lead to overspending. Make sure to comparison shop online first, or download an app that lets you compare prices before you buy anything in a store. Before you head to the cashier (or online checkout), make sure your purchase is within the budget you set.
- Avoid traps. Finding a spectacular sale on something you’ve been wanting can easily throw you off course. Stay strong and stick to your budget. And don’t apply for store credit cards you don’t need just to get a one-time discount.
- Use credit wisely. Limit the use of credit for holiday spending. If you must use credit, use only one card, preferably the one with the lowest interest rate, and leave the rest at home. Pick a date when you can pay off your holiday credit card bills, and commit to paying off the balance by that time. Be sure to check statements for unauthorized charges and report them immediately.
- Save your receipts. Not only will you need them for possible returns, you’ll need them to keep track of what you’ve spent and to compare with your credit card statement. Knowing how much you spent will help you plan for next year, too.
Keating noted that banks are committed to helping consumers responsibly handle credit and save for the future.
“Banks offer a wide menu of options to help you save for the holidays and other expenses,” said Keating. “Ask your banker about a customizable savings plan, such as a Christmas account that enables you to set aside money throughout the year for your holiday spending.”
For more information on managing your money – as well as a variety of other personal finance tips and resources – visit aba.com/consumers.
Resource Information: American Banker’s Association