The ushering in of the new year enables you to start afresh with your future goals. It gives you time to reflect on your past and current plans and give them new life. If you set your financial goals for the year, did you accomplish them or make progress? If you did, congratulations! If you did not, that's okay too. Here are five financial goals that can guide you in building wealth and securing your financial future.
Setting a Budget and Sticking to It
Setting a budget for your expenses, savings, and future goals can help you keep your budget on track. Determining what you will spend on groceries, personal care, entertainment, and even gifts can help ensure that you don't overspend in those categories. It's essential to keep track of your budget using a notebook, Excel, or a banking app to ensure you know how much you're earning, spending, and saving every month. Keeping track of your income, expenses, and savings will enable you to make adjustments to your budget.
Pay Down Your Debt
Reducing your debt can save you money in the long run. You save money by reducing the fees and interest that you are paying for your purchases. Here are three ways that you can reduce your credit card debt.
Start an Emergency Fund
You can't always predict when emergencies will occur, but you can plan for them. While establishing your budget, you can create a separate account to save for emergencies. Building an emergency fund for unexpected expenses can eliminate the need to use credit or loans to cover the cost of home repairs or your medical needs. A popular rule of thumb is to set aside at least three to six months of your monthly expenses in an emergency fund.
Plan For Retirement
The earlier you start to plan for retirement, the better. Setting a goal to begin your first paycheck of the year with an adjusted retirement savings rate can reduce your taxable income. Pretax contributions to a 401(k) or 403(b) can be made automatically through your employer using a payroll deduction. Your retirement savings will occur before your regular pay enters your checking account!
If you've already started planning for retirement, continue building your retirement by maximizing the employer match. It's free money. After maximizing the employer match, contribute additional income to prevent future debt later in life.
See my feature in MoneyRates: Retirement Planning Guide.
Improve Your Financial Literacy
You are one step closer to improving your financial literacy if you've read this far. Expand your financial knowledge by reading financial books, like the Psychology of Money (AD), and discussing your financial situation with a trusted resource. Having conversations about money can bring up financial options that you have not considered when managing your money. There are also many YouTube videos and other free resources that can guide you in building wealth and securing a solid financial future.
Need additional financial insights? Feel free to reach out to me for a one-on-one consultation.