By Tammy Fink
Have you made your New Year’s resolution yet? If you haven’t, consider to resolve your financial worries by creating your financial plan this year. Many of us this year will resolve to become financially fit. There are simple steps you can take to make this happen.
The first step is to identify your financial goals. How much money do you need to make ends meet from month to month? How much will you need to save for emergencies, vacations, better car and for the possibility of a rainy day (loss of employment)? What do you envision your retirement looks like? Do you plan on working until full retirement age (67) or will you be throwing in the towel early and retiring in your early 60s?
The second step is to create a spending plan that works for your family situation, whether that is single, single parent, married with or without children or widow/widower. Know where your money is going.
A review of the last two months of spending will help form your budget. Spending plans include fixed, variable and periodic expenses. Fixed expenses are those payments that do not change from month to month like your auto payments, mortgages, student loans and insurances. Variable expenses are those we have the most control over like utilities, groceries, gasoline, cell phones and eating out. Periodic expenses include maintenance on vehicles or homes, property taxes, gift giving, veterinary visits and co-pays for medical needs.
Remember to include 10 percent of your income to saving and investing. With each passing year, consider increasing your saving and invest by just one percent of your income to enable you to enjoy a comfortable retirement and to overcome the financial roadblocks and speed bumps in life.
Third, tackle any debt you may have. Finding an additional $5 to $500 in your spending plan can help to reduce your debt significantly. We are quickly approaching tax time and using that refund to secure your emergency fund and pay down debt is vital to your financial freedom.
Make sure you are withholding taxes at the rate you should be. You wouldn’t go to the grocery store and buy a candy bar for $1.50, give the clerk a $50 bill and say, I will be back in March to get my change now would you? That is essentially what you are doing by overpaying. Get into the habit of a smaller tax refund and more money in each paycheck.
The final step to completing financial stability is to recheck your spending plan on a routine basis. Review your plan often, say on a monthly basis. Are you following the plan? Do you need to adjust for an oversight? Am I saving enough to obtain your goals? You do not need to do this alone. Army Community Service has a staff of Accredited Financial Counselors that can assist. Services are free and confidential to all military personnel, retirees and civilians to include their families. We can be reached at 573.596.0212. Make the call to begin your new year on the right foot.
(Editor’s note: Fink is a Personal Financial Readiness Specialist at Army Community Services.)