For millions of Americans, the New Year is the time to reassess their life, identify areas for improvement, and resolve to make positive, impactful changes. Common resolutions involve weight loss, quitting smoking, or embarking on a new career or personal interest.
As you’re considering your resolutions for the New Year, don’t ignore financial goals. If your financial picture isn’t as stable as you’d like, now could be the perfect time to review your needs and goals and form new financial habits.
Below are a few resolutions that could help you improve your financial outlook. Implementing just one of these resolutions could boost your savings, reduce your risk exposure, and stabilize your financial foundation. Considering pursuing these resolutions in 2017.
Use a budget.
Don’t use a budget? You’re not alone. According to a Gallup study, two-thirds of American households don’t use one.1 That’s unfortunate because a budget is one of the most powerful financial tools at your disposal.
When you use a budget, you can quickly see how much money you have available and where your money is being spent. You can use your budget to guide your purchasing decision and reduce wasteful spending. You can also adjust your budget to maximize your savings.
Your budget should include both mandatory and discretionary expenses. The mandatory ones are the bills you have to pay. Discretionary costs are those that are flexible. Be sure to include savings as a mandatory expense. Once you get in the habit of paying yourself first, you’ll see your savings balances quickly rise.
Review your risk management strategy.
Life can change quickly. Very often, major life changes arise out of nowhere, and they can lead to substantial unexpected costs. If you don’t have a protection strategy in place, an emergency could limit your ability to save or even force you to pull money out of your savings.
Insurance can be a valuable protection tool. You can use insurance to protect yourself and your family from a wide range of emergencies, including home damage, costly medical treatment, and even disability. Life insurance can help your dependents avoid financial disaster should you pass away unexpectedly. This year, review your insurance coverage to make sure it meets your needs.
You should also have a liquid emergency reserve fund to cover any unexpected costs. If you don’t have an emergency fund, consider making 2017 the year you build one. Regularly contribute some portion of your income into a relatively save account that is earmarked for emergencies.
Increase your retirement savings rate.
For many Americans, retirement is their top financial priority. It’s a sizable obligation as you need to accumulate enough money to fund a retirement that could last multiple decades. The more you can save on an annual basis, the easier it will be to reach your goals.
You may find it difficult to dramatically increase your savings rate at once. Consider doing it gradually. For example, you could increase your 401(k) plan contribution rate by 1 percent every year or even once every six months. That way you increase your contribution rate without feeling a shock to your budget.
Ready to implement your financial resolutions? Let’s talk about it. Contact us at Baacke Insurance Services. We can help you analyze your needs and develop a strategy. Let’s connect today.
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