New Year’s is upon us again. So how did your 2016 financial resolutions pan out? Did you accomplish what you set out to achieve or did you come up a little short? Here are a few ideas to help you start small to enhance your chances of achieving your 2017 resolutions.
Some of my financial resolutions this year revolve around the idea of starting small and finishing big.
So what does that mean exactly? Well, if you’re like me you have a lot of common financial goals you want to achieve, for example: saving for retirement, saving for my kids’ college education, buying a newer (used) car, paying down debt, and better improve my budgeting.
The most difficult part is getting started as many of us feel these are just too big of goals. Too often we set ourselves up for failure because we think we need to go big and start saving a lot up front to even have a chance to achieve our goals. That’s not always the case. Here are a few suggestions on how to start small with your financial resolutions and finish big.
1. Pay down credit card debt using the ‘Debt Snowball’ plan
A “too big” of a goal example might be that you want to pay off all of your credit card debt by the end of the year. The truth is depending on the amount of debt you have that may not be possible. So how can you start small but finish big?
Follow these steps and you’ll be debt-free before you know it:
- Make a commitment to stop adding new debt.
- Write down and record the balance on each card, from smallest to largest, and include the required minimum payment.
- Determine how much you can pay in addition to the minimum payments. Pay that extra amount towards the card with the lowest balance each month until it’s paid off.
- Take the extra amount plus the minimum payment from the card you just paid off and apply it to the next credit card on your list, and so on.
2. Save early for retirement
You should always be thinking about retirement and how you’ll get there. Depending on your age, retirement is either right around the corner or as far away as The Shire is to Mordor. But don’t let that stop you from starting small now and finishing big.
To get on the path to saving for retirement, start early and look to your employer. Many offer a standard 401k retirement plan, oftentimes with a company match. Basically, your company will contribute X% to your retirement account. You absolutely should take advantage of that and contribute the same amount (or more) to meet their match. If you don’t, you are just throwing away money.
For example, if your current employer offers a 4% match, you should put 4% of your salary toward your 401k account. You are now putting 8% away for retirement and you’ve only contributed 4% of your salary. It’s a win-win!
Tip: A good rule of thumb is as your salary increases; say you receive incentive pay or you get an annual raise, you should bump up your contribution by 1% each time an increase in salary is received.
If your employer doesn’t offer a 401k, be sure to look into a Traditional or Roth IRA. Each have their advantages/benefits.
Got questions? Contact one of our knowledgeable financial advisors at MEMBERS Financial Services, an exclusive program for Unitus members*.
3. Take control of your finances
Easier said than done sometimes, but you can do it. If 2016 constantly had you coming up short in the cash department, start small by finding out where your money is going. Using a personal financial management tool like Total Finance from Unitus can help you manage your cash flow, plan your monthly expenses, track your spending and more!
Start small by setting some savings or spending target goals. Little-by-little you’ll start to get a better understanding of your money and how to manage it better and before you know it you’ll start to see big results each month. Total Finance is available for desktop or mobile and is free during your first 30-days of use.
4. Educate yourself (for free)
Being a Unitus member has its perks. One of those perks is attending a variety of free financial education seminars. The seminars which are hosted by Unitus staff, cover money topics like home buying, selling your home, women and investing, social security/retirement, and understanding your credit. These info-packed sessions will grow your knowledge of financial topics that are important to you and will help you see the bigger picture and better inform you when making important financial decisions. Seminars start up in February 2017 so be sure to keep an eye out on our website, email, and social media for upcoming events.
5. Start an emergency fund
Starting small is the key. Set up a special saving account at Unitus and deposit $25-50 each week or pay period, that’s $1,300-$2,600 per year based on 52 weekly deposits, or $650-$1,300 per year based on a standard 26 pay period schedule. Your goal is to have at least 3-6 months of living expenses in this fund.
As you continue to build this fund there will be temptations to take money out, avoid them at all costs unless an emergency occurs. Keep your eye on the prize and you’ll be on your way to building yourself a nice little emergency fund which will pay off BIG if an emergency should ever occur.
What do you think of these financial resolutions? Do you have one you’ll be attempting to achieve in 2017 that you’d be willing to share with our readers? Please post it in the comments below.
Posted by: Ryan Jones
About the author: Ryan has been in the credit union industry for 12 years and has been with Unitus Community Credit Union since 2007. He started his credit union career in California before finding his way to Oregon. In his day job Ryan oversees and manages digital strategy for Unitus including; website, social media, email, digital advertising, and more. However when the work whistle blows he is all about his family. Ryan and his wife moved to Oregon in 2006 from northern California and have two children.
*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (800) 369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. The Representative may also be a credit union employee that accepts deposits on behalf of the financial institution.