As we ring in the new year, it's an ideal moment to give our finances a fresh start. Think of it as a new year's resolution for your wallet, concentrating on key areas like expenses, debt, savings, credit, and retirement. You may need to readjust your financial goals or create new ones.
Regardless of where you are on your journey, below are a few helpful strategies from Members Choice Credit Union that may help you achieve financial wellness in the year ahead.
Assess your current financial health
While it may seem elementary, the first step in evaluating your current finances is to set a budget and analyze your spending. If you want to set aside money in 2024 for retirement, college tuition, or a dream vacation, you need to understand where your money is going monthly. With interest rates not expected to drop anytime soon, the new year is a great time to take advantage of debt consolidation offers to pay down high-interest credit cards or refinance vehicle loans. Consider looking into cash back reward programs to ensure you get the best returns on everyday purchases.
While analyzing your expenses, set aside time to review payments and subscriptions. Do you need all of them, or are there some you can live without? You can redirect some of these funds toward your savings account or to pay off debt.
Prioritize savings
After you’ve evaluated your spending habits and determined where and how you can trim your budget, you can begin setting some goals for saving money.
First, you should establish an emergency fund. Members Choice Credit Union recommends having at least $1,000 set aside for unforeseen circumstances and aiming to have at least three months’ worth of expenses saved. This safety net can provide financial security and give you peace of mind during unexpected challenges, such as an auto or home repair.
Next, look for ways to make your money work for you and put it into an account that pays interest. Determine where your savings should go-whether into a high-yield saving account or a certificate of deposit (CD.) If you set aside your hard-earned dollars in a high-yield savings account, for example, you can compound your interest daily, monthly, or quarterly. Saving can pay off, especially with interest rates at an all-time high. An easy way to start is to set up an automatic transfer into your savings account or have a portion of your direct deposit go directly into savings each month.
Nurturing your credit score
The new year is also an excellent time to check your credit score. You have the right to request one free copy of your credit report from each of the three major consumer companies weekly (Equifax, Experian, and TransUnion) without being penalized. Carefully reviewing quarterly for any inaccurate or incomplete information is a great starting point.
If you have a good credit score (670 to 739 and above), banks and lenders are more likely to approve your credit applications, and you will receive better terms and payment options. Making regular, on-time payments is the easiest way to improve your credit score and keep your lending options more affordable.
Get expert guidance from a professional
You don’t have to do this all alone. Just as a personal trainer helps you shape up physically, a financial advisor can be your fitness coach for money matters in the new year. They can assist in honing your financial strategy, whether finding savings opportunities, managing debt, or aligning goals with practical actions. Consider engaging an expert who can help you get to the next step in your journey and help you feel more confident and secure about your financial future. Like anything else, you’ll want to do your research by checking credentials and confirming they can act as a fiduciary.
Be kind to yourself
Remember, financial wellness is a journey and not a destination. Be kind to yourself, acknowledging that everyone faces challenges and makes mistakes. Seek professional advice and take deliberate steps to assess and improve financial well-being. By doing so, you can start the new year with a clear plan and renewed focus on financial health to succeed in all aspects of your life. Your future self will thank you for it.
*This article has been reprinted with permission of Energy Corridor Living Magazine.
