Do you feel like your financial situation has been going off the rails on a crazy train this past year, or even for several years at this point? That doesn’t mean you can’t act now to change your direction and get on financial track in the New Year and beyond. It will take some planning and dedication, but even the most disorganized of spenders can rein in their spending to create a better financial outlook for the future. Here’s where you begin.

Create a Budget

You can’t correct your financial woes if you don’t fully understand how far-reaching they are. Creating a budget gives you that big-picture image of your financial situation. Here are the simple steps to create your budget.

• Step One: Put all your expenses on paper. 
  This might be a long list, but it also needs to be comprehensive, including everything you spend money on. Make sure to average your spending on things like food, entertainment, subscription services, fuel, groceries, mortgage, eating out, clothing, utilities, car payment, vehicle maintenance, gifts, etc. to break it down into a monthly figure. Also, divide annual fees and expenses by 12 for an average. Make a note, while you’re it, of which expenses there might be room to save money on, such as on your cell phone bill or cable bill.
• Step Two: Write down your monthly income. This includes all revenue, including income from second jobs, dividends, trusts, etc. Again, if you get a certain payment only once per year, divide it by 12 to prorate it into a monthly figure.
• Step Three: Subtract your expenses from your income. In some cases, the result of this mathematical equation is painful to see. It may even be frightening, especially if you’re already struggling with a significant credit card and other personal debt.

Your budget gives you knowledge of your financial situation. Use this knowledge to take a good, hard look at your expenses to reduce or eliminate unnecessary costs. 

Pro Tip: Try using My Budget Manager inside Online Banking to help track your budget in real time. My Budget Manager is an online Personal Financial Manager (PFM) that allows enrolled members to import online banking account information from inside or outside the credit union into their online banking profiles. With one-time setup, single sign-on and intuitive navigation, My Budget Manager makes monitoring cash flow, maintaining budgets and managing financial goals convenient and easy. 

Plan to Pay Off Debt

If you really want to get on financial track, having a plan to pay off your debt is critical. It can’t be a wish or an afterthought. You must devote time, energy, and effort into the process of reducing your debt in the year ahead.

These are a few steps that can help you make headway in this endeavor.

• Pay more than monthly minimum payments on your credit cards.
• Apply bonuses, dividends, etc. to pay off credit card debt first.
• Move on to pay off other debts – starting with the highest interest debts first.
• Use some or all of your annual tax return refund to pay toward debt.

The key, in all of this, is to act to make your financial situation better.

Start a Savings Account

Savings accounts give you something other than credit cards to rely on when emergencies arise. It’s a zero-interest loan of sorts you give yourself to manage life’s little storms.

One way to do this is to determine how much money is left over each month after paying your expenses. Designate that as the amount you wish to put into savings after each check. Then, set up payroll deductions to automatically transfer that amount into your savings account.

Remember to treat those “savings” from expenses you’re able to reduce or eliminate and roll them into actual savings (versus spending those savings on something else).

Once you have a balance built up, you might want to move it to an account that pays higher dividends on your balance, like our Kasasa Cash Rewards Checking account that pays 5.00% APY* on balances up to $5,000 if qualifications are met.

Prepare for Your Future

Preparing for your future can mean different things depending on what you’re planning. Whether you’re saving for college, a car, a vacation, or a home, you need to prepare for these upcoming expenses.

However, preparing for the future almost always includes having a financial plan in place for your eventual retirement. If you don’t currently have a retirement plan in place, consider starting one. If you do, the beginning of the year is the perfect time to assess the state of your plan and the progress you’ve made. Don’t forget to take advantage of the full amount of your company’s matching programs, which offer free money toward your retirement.

Remember, you can contribute to both an employer-sponsored retirement plan, such as a 401(k), and a Roth IRA. So, if your budget permits, consider taking advantage of all retirement vehicles offering tax advantages.

Finally, call or come talk with us about other ways you can save for the future and how we can help.

We’re Here to Help!

Getting your finances on track in the coming year doesn’t have to be a total sacrifice. Let us help you identify opportunities to save for and invest in your future today so you can enjoy your life’s journey, wherever it may take you.

When you’re ready to open a savings account, automate the transfer of funds, or begin planning for your retirement, stop by any branch location or give us a call at 800.336.6309 to learn more about all the ways we can help.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.