Developing The Habits For Success In The New Year
Financial stability does not happen overnight, but it is within reach with some careful planning and lifestyle adjustments. The road to financial security begins with living within one’s means, developing a cushion for unplanned expenses, paying down debt, and saving for the future.
Living Within Your Means
Sometimes it can feel difficult to live within our means, especially if we find ourselves living paycheck-to-paycheck. The best way to find ways to cut expenses is by making a monthly budget. Calculate how much income you expect to bring in that month, and subtract necessary expenses such as mortgage or rent payment, car payment, utilities, and groceries. Reduce spending in leftover areas, such as eating out, impulse purchases and shopping, and entertainment. Look for ways to reduce other recurring expenses. Some ideas include shopping around for lower insurance rates, canceling subscriptions and memberships, and couponing, buying bulk, and buying sale items to reduce grocery bills. A great app to help control your spending is the FitzsimonsCU Card Manager app. The app can allow you to set spending limits for specific merchants such as grocery, retail, and even gas.
Building Emergency Funds
Financial planners recommend accumulating at least a paycheck or two in your checking account for unforeseen expenses, as well as having at least 6-9 months’ income in a savings-type account, where it can accumulate interest but still be withdrawn in case of emergencies. Unplanned expenses include car repairs, major medical bills, job loss, and more. It may take some time to build these funds, but after you’ve made your budget and reduced expenses, your next priority should be to set aside an amount each month from your paycheck. Keep at it until you’ve built up your cushion.
Paying down Debt
One of the keys to financial success and security involves paying down debt, as well as avoiding future debt. Pay down “bad debt” first, such as credit cards, car loans, and any other loans that have high-interest rates.
Increasing Your Savings
Financial security and stability also involves saving for the future. After you’ve taken the steps above, increase contributions to a retirement account, such as an employer-matched fund or a Roth IRA. If you have not started to save for retirement, it is never too late to start, but begin now. It is ok to start out small, but plan to increase your contribution as you become more financially stable. If you are looking to save for something short-term put your money in a Money Market account. A Money Market account will allow you to earn higher yields on your money than a traditional savings account.
No matter how great or small your wealth is, financial stability is within your reach with some careful planning. If you’re ready to take control of your financial security, consult a financial planner today. For more ideas on how to cut costs and build your net worth, see here!
Fitzsimons Credit Union is based in Colorado and has been working with our partners for over 60 years to focus on their lifelong financial needs, as well as deliver an exceptional partner experience. Our services include financial planning, IRAs, savings accounts, youth and student accounts, and much more. Find out how Fitzsimons Credit Union can help you achieve financial success and stability by stopping by scheduling an appointment at one of our branch locations.