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Better Budgeting in the New Year

Better Budgeting in the New Year

Judy McGuire, NerdWallet

© Copyright 2015 NerdWallet, Inc. All Rights Reserved

Making a financial plan can seem like a downer after the holidays, but it doesn’t have to be. These five simple steps can help you start the new year right.

Set money goals

Whether it’s paying off your student loans, getting your retirement savings on track or building up your savings, it’s important to set concrete goals.

Saying “I want to save more money” is good, but without a tangible goal, it’s easy to let that idea slide. A better goal is “I want to increase my retirement savings by 20%” or “This year I will pay off my credit cards.”

Notice that we’ve avoided the word “resolution.” That’s because resolutions are often amorphous and easily forgotten. Once you determine your goals, it’s easier to attain them.

Remove your barriers

Assess what’s been holding you back. Is your salary too low? Make this the year you ask for a raise or find a new job. Is your rent too high? Move or get a roommate. Is your retail habit too intense? Stop shopping!

Make a budget

Next, set up a budget. This isn’t just a record of what you’re spending; it’s a way to make your money work for you. Add up your income, then subtract your expenses. Once you see exactly how much money is coming in and going out, look at your goals and come up with a viable strategy.

Get out of debt

Take a hard look at your debts and prioritize how you’ll tackle them by interest rate. Plan to pay off debts with the highest rates first, which will almost always be credit cards. If you have a lot of credit card debt, calculate whether it’s worth it to do a balance transfer to a zero- or low-interest card. (Transfer fees will affect whether that’s a wise strategy for you.)

Start saving

Not only should you have an emergency fund, but you should also (ideally) sock away 15% or more a year into retirement accounts, depending on your age and when you plan to retire. You can help the whole family build good financial habits by getting the kids into the savings game early. Financial institutions like Silver State Schools Credit Union offers special accounts for children under 18.

The bottom line

Going over your finances may not be the most exciting way to celebrate the new year, but having a strong financial plan will have a positive impact on your life long after the twinkly holiday lights have been packed away.

Holiday Budgeting
Release Date: 12/17/2015

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