Instead of making generic resolutions that get abandoned within a few weeks or months, a savvy financial plan will solidify your long-term prosperity. Here’s what to consider:
- Review your 2021. The past two years have wreaked havoc on budgets across the board. Review the past year with an honest, critical eye and make note of what you’ve learned.
- Track your spending. Break your expenses down into categories—like utilities, insurance, food, entertainment and clothing. If you’re tracking every dollar, it’s easy to see where you can make adjustments and increase savings.
- Set short- and long-term goals. Short-term goals are essential to achieving your long-term goals. These stepping stones help you keep your eye on the prize, accomplishing smaller milestones along the way.
- Automate your savings. Automating your savings takes the emotion and choice out of the equation and, once you’ve adjusted to not having that money, you’ll likely never miss it.
- Use bill pay. If you’re relying on your memory to trigger you to pay your bills on time, you’ve probably missed a due date or two, resulting in unnecessary late fees. Bill pay can help you avoid these fees—just set up payment dates on your mobile banking app or online banking site.
- Increase your retirement contributions. Ideally, you should set aside 10% to 20% of your income for retirement. If that amount seems overwhelming, start with what you can afford. Then, increase your contributions by 1% monthly, quarterly or yearly.
- Review your insurance. By revisiting your coverage every year, you can make sure everything is up to date. Your review should include life, home, health, auto, and disability.
- Ramp up your emergency fund. If you recently needed to dip into your emergency fund to make ends meet, now is the time to make a plan to refortify your account. Of course, it’s impossible to predict when an emergency will arise, so being prepared is the best strategy. Remember, your emergency fund should be large enough to cover six months of expenses.
- Rebalance your investments. If your investments took a hit over the last two years, you’re not alone. The stock market made a pretty good comeback but, after this record performance, your portfolio may be out of whack. Review your values, goals, and risk tolerance and make sure your investments are still in line.
- Check your credit report. It’s important to review your credit report every year. Mistakes can lower your credit score, possibly causing you to pay more in interest fees on loans, lose out on rental opportunities (apartments, etc.), or even be turned down for jobs. Visit annualcreditreport.com to order your free credit report.
- Assess your estate plan. An estate plan is not just for millionaires, it’s something that everyone can benefit from. Once you have an estate plan in place, be sure to review it annually and make any necessary updates.
Putting together a solid financial plan at the beginning of the year can help set you on the path to financial wellness. If you need some support or guidance, consider meeting with an advisor at Mountain America Credit Union. They can help you identify your priorities and put together a plan to reach your goals.