As we enter 2018, many Americans are taking stock of their accomplishments for the past year and setting goals for the coming 12 months.
According to a study by Nerdwallet, the top ten financial goals for Americans this past year were as follows:
- Paying down debt (58%)
- Saving more money (53%)
- Avoiding further debt (42%)
- Saving for vacation (31%)
- Retirement planning (28%)
- Buying or leasing a car (27%)
- Buying a home (23%)
- Starting a business (10%)
- Saving to have children (8%)
- Saving for a wedding (8%)
Are any of your personal goals on that list?
Here are some ideas to help achieve your financial goals this year:
Identify your goals
Without a plan, without a goal, it’s highly unlikely that you will look back in a year’s time and feel that you’ve made any progress. Identifying your goals and setting time frames and deadlines in a specific way, is key to knowing how to allocate your financial resources. Whether you’re saving for a house, or a car, or reducing debt, you’ll need a roadmap to make sure you meet your personal milestones.
This is one of the most essential ways to meet your financial expectations, and yet only about one third of Americans keep a budget. Developing a budget is a rather easy process. Start by jotting down all your monthly income, and then your known expenses, like rent, car insurance, and groceries, etc. Then compare them. Knowing how much you're spending in each category will help you identify any trouble areas.
Stay on top of it
There are many resources out there to help track and plan your monthly expenses and pay down your debt -- nomoredebts.org is one such resource. Using a tool to stay on top of your spending and give you a realistic picture of where your finances are at any given time, will allow you the freedom to keep spending in check when needed and also allow you to indulge yourself, when you have the resources available.
If you have multiple debts, start with the manageable ones. Let’s say you owe $25k on a credit card, and only $2k on a medical bill. Let’s start with allocating any above-minimum payments to the medical bill first until that’s totally paid off. Then let’s tackle the next smallest, and so on. Before you know it, you will have taken care of some major debt in the course of a year.
By paying off low-balance debts, you free up money you can put toward an emergency fund or other debts. Just be weary that as you free up more money every month, you don't increase spending.
34% of American adults have no emergency savings at all, according to a March 2015 survey by public advocacy organization, NeighborWorks America. If it were easy, everyone would do it. Unfortunately, it’s not that easy, and yet it’s one of the most important elements in making a better money plan. Once you’ve reduced debt, you should focus on squirreling away three to six months’ worth in a money market account, which can help your savings grow.
Saving money now will help reduce your reliance on Social Security when you're older. Setting up a retirement investment will assure you have enough money when the time comes. One idea is to seek out additional income sources, and use the money earned to pay towards a retirement investment. Whether you take a part-time side gig, or tutor on the weekends, or use a unique skill that you have to earn some extra cash, put that money straight into your retirement fund.
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