Special to the Recorder
A new year offers a fresh outlook on many aspects of our lives, and that includes our personal financial picture. Unfortunately, according to a report from the University of Scranton’s Journal of Clinical Psychology, only 8 percent of us actually achieve our New Year’s resolutions. This year, set realistic goals that you can achieve throughout the year. Here are a few easy-to-follow tips that will help you set a fresh, yet strong financial start in 2017.
Prevent identity theft
With the increase in online shopping, computer hackers are working overtime to gain uninvited access to your accounts. This is especially important if you use the same login credentials for multiple sites. One way to help keep your information safe is to create different usernames and passwords for each of your online financial accounts. Reviewing your credit report helps you catch signs of identity theft early. Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting company.
Calculate your net worth
The beginning of a new year is always a good time for evaluating your net worth statement to monitor your progress towards your financial goals. Taking a close look at all of your assets and liabilities helps paint a clear picture of where you are now with your spending and savings, and where you need to make adjustments.
Create a budget
In the same way that fad diets or quick-fix exercise programs often fail, unrealistic budgets usually get tossed. Track your spending for one month to see where your money is going, and then create a sustainable budget that balances expenses versus income. Remember when you create your budget to include an amount to go into savings every month, and pay yourself first!
The interest rate on credit card debt has increased in 2016 and will continue to do so in 2017. When you list your debts on your net worth statement, put them in order. The smallest credit card or loan balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the higher interest rate debt first. As you pay off an account, apply the funds you were using to pay that debt toward the next one in line. There is a psychological benefit to paying off the smaller accounts quickly and you will be more motivated to stay on track with your goal to be debt free.
Reset retirement plans
If you have the opportunity to save for your retirement through a 401(k), 403(b) or 457 plan provided by your employer, put aside as much as you can each month. You can’t start too soon, but any time is better than never. Take full advantage of employer matched contributions. Even if you’re covered under a retirement plan at work, you and your spouse may be able to contribute to a Traditional IRA or Roth IRA. Be sure to consult a financial advisor regarding your particular tax situation.
Automate your savings
Online banking allows you to frequently monitor your spending and ensure your bills are paid on time, which improves your credit score. Establish an automatic transfer from your checking account into savings each pay day to create a financial safety net in case of unexpected life events. Start with a savings goal of $1,000 for small emergencies and build it up over time to equal about three months of your income.
Whether your particular situation is simple or complex, everyone should have a financial plan. It is always wise to meet with your financial advisor at least annually to review your goals and obtain professional advice on how you can best achieve them.
Cheryl Barnett is senior vice president with First Tennessee Bank in Jacksonville.