Financial Resolutions for 2016

New YearsMaking your New Year’s resolutions. Every year people decide on changes for the coming year. Include your financial life for 2016. Let’s take a look at some ideas.

Investigate 401k Employer Matching Contributions:  Most 401k plans provide for employer matching contributions. The match consists of the employer contributing a certain dollar amount to your 401k account based on the dollar amount you contribute. For example, your 401k plan has a dollar for dollar employer match up to $1500. For every dollar you contribute to your account, your employer will also contribute the same amount to your account. Once you have contributed $1500, your employer will stop contributing. Think about it – you put in $1500 and your employer puts in $1500, now your 401k account is worth $3000! That is called ‘free money’ from your employer. Each plan is different so you need to check with your Human Resource manager to determine about your employer’s matching contributions.

Start A Savings Account:  Are you always having problems saving? A good solution is to have a set dollar amount automatically taken from your paycheck and deposited into a separate account. This account can be a saving, money market or mutual fund account. Start off slow, $25, $50 or $100 each month. Come June, you should double the amount. If you deposited $25 a month and double to $50 in June, by this time next year you will have $475 extra. Your deposit amount is less than a dollar a day which is less than one McDonald’s coffee a day. Put away $50 a month, double to $100 in June, and you will have $950 at the end of the year. For those able to save $100 a month, then double to $200 in June, a total of $1900 will be your savings for the year.

Track Your Expenses:  Not sure what you and your family are spending on all those expenses? Also, do you have trouble staying on those day-to-day budgets? Try this tip:

Day 1: Spending no more than 30 minutes, write down all your monthly fixed expenses (examples include: mortgage/rent, internet, and car payments) and what dollar amount you spent on each. Do this first step from your memory.

Day 2: Again no more than 30 minutes, look through your checkbook and see what monthly expenses you have forgotten and correct any amounts you misquoted on Day 1. Also, add in any monthly variable expenses (examples include: clothing, groceries, car maintenance and fuel, and home utilities such as electricity, gas/oil and water).

Day 3: Still just 30 minutes, pull out those credit card bills and come to terms with what and how much you charge on your credit cards. Plus, be sure and note all finance charges and late fees.

Day 4: Pull all those expenses together and see if there are any revelations. At this point, you have some good information. Now, you have the choice to modify your spending habits.

 

These financial tips can begin with the New Year and last a life time!

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What Young Couples Should Know About Debt

Young Couple and Money

Young families often acquire a large amount of debt from unpaid student loans, car payments and credit card usage. Things get worse financially, when they add in the responsibilities of starting a family. If you are a young adult who is yet to find a high-paying job or cannot afford to have his own home or car and constantly struggling with his family debt burden, then make a move right away. Financial planning and an effective debt management plan can always help you in this regard and can save you from crumbling under harrowing debts. Read on, to know about the financial fiasco which you must evade in order to attain a debt free life ahead. These following preconceived notions of young families are mainly responsible for their financial disaster and debt chaos in future so make sure you avoid them strictly.

‘Professional help is not required’

Young families with debt, especially those who have children, should consider meeting a financial planner to put their finances in order. A financial planner not only set a proper budget for you but also advises you to invest your money for the best possible returns. With a financial planner there to guide you, you can easily set your financial priorities. Saving for a home must be the top priority amongst all. They might suggest you to make a college fund for your kids and a rainy day fund for unexpected emergency crisis. Only a certified and reputed financial planner can guide you the best and can help you to meet your financial targets.

‘What is so wrong with a little credit card Debt?’

The greatest financial blunder a family makes is carrying too many credit cards and their huge credit card bills. It is particularly difficult to mitigate and manage credit card debts because they have the highest rate of interest which is more than 17 %. Being inexperienced, young families often commit the mistake of making the minimum monthly credit card payments. What they fail to understand is if they continue to do this it will take them more than a decade to pay off the entire balance. Ideally, they should attempt to make at least $100 more than the minimum payment on each credit card account. Young and yet to be settled families should strive to use cash instead of card as much as possible and in case family members face difficulty controlling their use of credit cards, they should look for assistance from a licensed credit counselor regarding in this regard.

‘Fly without a Budget’

A close kin to any debt issue is poor budgeting. Young couples tend to overspend mostly because they often underestimate their expenses. The problem originates from their flawed spending habit which is to spend first and then plan to save the amount left. Unfortunately enough, after spending incessantly there is hardly any amount left at the end of the month. As a remedy to this problem make a frugal budget keeping in mind all your daily expenses and saving plans and follow it sincerely.

‘Retirement is Far Away’

Many young couples just don’t decipher the significance of saving for retirement and skip investing in their 401k retirement plans or IRAs. As these youngest wage earners are under a misconception, that retirement is a long way away from them, they prefer to focus on short-term goals, like buying a new car and fail to contribute for long time investment like retirement plan. Those who invest at least 15 percent of their income in retirement savings consistently from an early age remain far ahead financially after retirement than those who don’t.

Keep in mind the above mentioned points and avoid repeating these mistakes in future. Steer your financial life to the right direction as soon as possible.