New Year’s Resolutions To Manage Your Finances in 2018
December 26th, 2017 by Bunch & Brock
With the imminent arrival of 2018, have you thought about your retirement? Are you pledging that in the new year you’re going to whip that retirement plan into shape? If you’re serious about that resolution, we have a few simple suggestions that can turn your retirement strategy into a solid, actionable plan.
If you Haven’t Got One, Create a Workable Budget
About four in ten American households regularly follow a budget. Making one’s not hard. Sticking to it is. But it is the best way to get a handle on spending and avoid financial peril.
Budgets don’t need to be sophisticated or fancy. Simply list all your monthly expenses (even one-out expenses) and compare what’s going out to your monthly salary. If there’s enough to save, then things look pretty good. But if there’s more outgo than income, you need to find ways to free-up cash. So having that budget identifies areas where you’re paying too much and those you need to trim back, because the first thing you then need to do is find the money to…
…Establish an Emergency Fund
It’s estimated that 57 percent of U.S. adults have less than $1,000 saved for a rainy day, while 39% have no “parachute” at all. Think about it: more than nine of every 10 Americans are unprepared for even a small “rainy day.”
Everyone must have cash on-hand in savings to cover a minimum of three months’ worth of living expenses(ideally, six months) so they DON’T have to live off their credit cards! What happens if you lose your job, get injured in a car accident, your kids get sick, or face some other expensive surprise? Savings keep you from living hand-to-mouth and at the mercy of life’s events.
Get out of Credit Card Debt – as Fast as You Can
At over a trillion dollars, credit card debt just reached an all-time high in the U.S. The average household owes an obscenely high $16,000. So the sooner you start paying your plastic down, the less money you throw away on interest charges. What if you have a $5,000 balance on a card which includes an accumulated 15 percent interest (and we’re being kind … what if it’s five points higher?). If you pay that sum off over five years, that’s over $6,000. But if you commit to paying off that balance in 2018, the total amount paid will be around $4,000. That’s about $2,000 saved in your pocket by the end of 2018. What can you do what that “found money”?
There’s No Time Like the Present to Start Saving for your Future
Yes, you’ve heard it before: “Put away money for your retirement.” Nearly half of Americans have little – if any – retirement savings. We have a question you probably don’t want to hear: Do you think Social Security alone will take care of you in your “golden years”?
If you don’t have an IRA or 401(k), that credit card savings we talked about will make a nice contribution to get started. The anticipated tax bill currently in Congress notwithstanding, workers age 50 and under can get noticeable tax breaks when they contribute up to $5,500 to an IRA and $18,500 to a 401(k). And if you’re over 50, the incentive is even greater: $6,500 for an IRA and $24,500 for a 401(k).
An Everyday Pledge – Stop Wasting Your Hard-earned Money:
The easiest way to save – now that you have a budget – is to review all your needless expenses. Go over it line by line. How often do you use that gym membership? Do you eat out too much? Can you get another year out of that suit? Look at every expense and answer honestly which ones are giving you zero benefit? Pledge to be frugal and you’ll be surprised where the money comes from to live a more fiscally fulfilling life that allows you to save for now and the future and yet still enjoy life – reasonably.
To learn more about how we might assist you with bankruptcy or estate planning issues, contact Bunch & Brock by calling 859-254-5522 or filling out this online form.