A new year brings a fresh start and the opportunity to make meaningful changes—big or small—that can impact our lives not just for the year ahead, but for the long term. One common tradition is making New Year’s resolutions: commitments to somehow change our behaviors or habits, whether for the year to come or an indefinite period.
Managing money is an essential activity that for some is enjoyable but a chore for others. Certain individuals may want to automate common financial actions such as contributions to retirement and investment accounts or withdrawals from savings or checking accounts; they may also be able to leave some of their decisions to a financial or investment advisor. A “set-it-and-forget-it” passive approach to money activities and accounts is perfectly valid, but other people have a more active, “hands-on” style for taking care of their personal business.
Regardless of your preferred approach to money, there are a few financial management activities that are worth continuing or starting in the new year, and anyone could resolve to consider adopting them. These resolutions can provide benefits this year and, possibly, for decades to come. Starting this month, think about initiating these money management activities:
- Create or just adjust a comprehensive annual budget. What’s your budget this month or this year? Do you know exactly what you are spending, saving and investing monthly or annually? Having a budget provides greater control over money and helps achieve short- and long-term financial goals such as paying off a car, owning a home, sending someone to college, going on an amazing vacation, helping a family member or friend or retiring comfortably. Creating a budget isn’t difficult, and once it’s set up then you can revisit later, such as at the middle or end of the year to adjust and stay on track.
- Let your emergency fund emerge and grow. Make a strong commitment to adding to and growing your emergency fund every month. Finance professionals typically recommend saving the equivalent of three to six months' worth of living expenses in a separate emergency fund to offset an unexpected job loss, medical emergency or other financial setback. Any amount contributed to the fund helps it grow, and the amount may be small enough that it’s not a financial burden. Then, have $5 to $25 automatically deducted every paycheck or once a month to a savings or checking account set up just for the emergency fund. If you don’t have an emergency fund then the absolute best time to start one is now.
- Ensure to insure—be certain that your insurance coverage is at the appropriate level for this stage of your life. The person you are at 25 years old may be very different from what you are when you are 45. As our life evolves, insurance needs to evolve with it, including ongoing changes to life and homeowners insurance. Every year insurance should be re-evaluated to determine if the type and amount of coverage is appropriate for your current life, properties, possessions and activities. Insurance should not be static; it should be dynamic and change so it’s a proper fit during every stage of life. Coverage—and costs—may need to increase, or, instead, unnecessary coverage could be eliminated and result in a net cost savings. Keep in mind that it might be a good idea to periodically shop around to see if you’re getting the best coverage for the best price.
- Boost your retirement plan contributions by just 1% (or more) either for the short term or long term. If your retirement allows you to adjust your contribution amount, consider increasing it this year. Aim to raise your contributions by at least 1%, whether short-term or long-term—each option comes with its own considerations and benefits. One short-term option is if you are expecting a financial bonus sometime this year, increase your retirement contribution when the bonus is deposited, and then after some of the bonus money is transferred into the retirement account, re-adjust the contribution level to where it was before the bonus. Alternatively, increase the contribution level when you receive the bonus or after an annual raise and maintain the higher contribution level for as long as possible; a long-term contribution. Anything that can be done to boost retirement savings is an important investment in your future.
If it’s hard getting started on any of the above actions, then consider if you need a money management professional for some assistance. If you’re a Delta Community Credit Union member, did you know that…
Free financial counseling for our members is available any time of the year from the non-profit BALANCE™
BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.
Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.
Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.
Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.
How about more free ideas on managing money during different phases of your life?
For more information that may help you manage your costs and finances, look into the free Delta Community Financial Education Center webinars on a range of practical, “how to” topics that could potentially help save you money and enable you to better manage your income, financial assets and life. Please visit the Financial Education Center's Events & Seminars page to review and register for its monthly on-demand webinars.
The Credit Union’s blog has more practical information that could help cut costs and save money:
