As we settle into the new year, you might be thinking about what sort of resolutions you want to make this year. “Get better with money” is one we hear quite a bit—and not surprisingly, we have quite a few new faces coming through our doors in January and February! Many people see this as the best time to shed the bad habits of the past, and become more adept at managing their finances, with our help.
To help you start the journey to a more financially secure future, we’ve put together a list of ideas and tips to get you started. And as always, we at Cabanillas & Associates are here to assist you in person, in one of our nine locations.
So, what should you be doing with your money in 2016?
Create a financial plan.
To start this year off right, sit down and make a plan for your financial future. Think in terms of retirement—even if that’s a long way off—and work backwards. What will you need to do to ensure you have enough money to live? Calculate a realistic annual cost of living for your retirement, multiply by 20 years minimum, and don’t count in social security payments (because frankly, you may not get what you once expected from social security). Determine what you should be putting away each year. We’re happy to sit down with you to discuss the more complicated aspects of this, like savings, interest rates and the best resources for saving.
Build up an emergency fund.
One thing too many people fail to do is keep an emergency fund—even a small one—set aside for those inevitable times when a boiler breaks or the car needs a repair. We recommend putting away ten dollars a month (or more) until you have a minimum of three months’ salary put away for those unforeseen events.
Every three months, think through upcoming expenses.
At least four times a year, put a date in your calendar to sit down with all financially-contributing members of the household, and discuss any upcoming expenses. For example, if you know a car needs to be replaced, or school supplies need to be bought, have it down on paper and begin putting that money aside in addition to your regular savings.
Pay down debts and channel those payments into savings.
Some people keep a balance on their credit cards and treat it as a bill that can be paid any time in the future. Instead, think of this as something to be paid off as soon as possible, and put this ahead of your savings until it is paid off.
Try to get better interest rates on your credit cards and loans.
When is the last time you spoke to your bank about better interest rates? Has it been awhile? If you’re like most people, you really only worry about this once (when you sign up for the line of credit). However, you might be able to get a better interest rate if you look into it, so it’s definitely worth making that phone call.
Have questions, or want to make an appointment to better understand your options? We’re always happy to help.