The New Year is a great time to start taking steps to reach a financial goal. If you need assistance in choosing a goal, there are online tools that can help you get started. Make a list of both short- and long-term goals and be as specific as you can. For example, a long-term goal is boosting your retirement savings. A short-term goal is setting up or increasing regular contributions to a retirement account.
Here is a list of common financial goals:
- Saving for a down payment on a home or car
- Paying off student debt
- Saving for a big life event like a wedding or the birth of a child
- Building an emergency savings fund
- Saving for retirement
- Paying down high interest debt
- Saving for your children’s college education
These five steps may help you work towards achieving your goals for the year:
1. Update your budget
- Are you making more or less money than last year?
- Has your rent or mortgage payment increased?
- Do you have new expenses such as day care or car payments?
If you don’t have a budget, this is a good time to create one. You can use an online budget calculator or make your own budget worksheet.
2. Pay down debt
Ongoing debt can be overwhelming, but finding small ways to make additional payments can help you pay it down. See if you can afford even a little out of your monthly budget to increase your regular payments. Or with tax season coming, you may get a refund that could be used toward your bills.
3. Make saving automatic
To make saving money easier, you can set up a recurring automatic transfer to your savings account through your bank. If you use online banking, you may be able to set the transfer up yourself. If not, ask about this option the next time you are at your local bank branch. You can also ask your employer about automating retirement savings – you could have money automatically deducted from each paycheck and put into your 401(k) or other retirement account, such as an IRA.
4. Take steps to improve your credit score
Having a higher credit score could help you [get lower interest rates when you borrow and improve your access to credit. Get your free annual credit report and review it to check for errors. You can dispute errors with the three national credit bureaus. Some tips include to make sure you pay your bills on time, don’t miss payments, and keep your credit card balances low.
5. Cut spending to fund savings
Many of us spend more money than we realize on things like eating out, new clothes, and entertainment. Track your spending on these) items and see if you can trim a bit which you could put into savings to help meet your financial goal.