Make Financial Fitness Your New Year's Resolution
The beginning of a new year is a great time to recommit to your goals. The following tips will provide a fresh start to 2011 and can help you achieve financial fitness.
Write out your financial goals: It is beneficial to write down your goals to effectively track progress. Remember goals should be SMART:
- Specific: A specific goal has a much greater chance of being accomplished than a general goal. To set a specific goal you must answer the five "W" questions:
- Who is involved?
- What do I want to accomplish and what are the requirements and constraints?
- When does it need to be completed?
- Where is the location?
- Why accomplish the goal? Include specific reasons, purposes, or benefits.
- Measureable: To determine if a goal is measurable, ask questions such as how much, how many, and how will I know when it is accomplished?
- Achievable: Make sure your goals are realistic. It is more realistic to increase savings by $1,000 in one year – not become a millionaire in 3 months.
- Reviewed Often: Frequently review goals in order to stay on track. Visual reminders help goals stay on the top of your mind and keep you focused. For example, put a picture of your dream vacation on the fridge, or your ideal home as your computer's desktop background.
- Time Bound: A goal should be grounded within a time frame. With no time frame tied to it, there's no sense of urgency.
Budget: Resolve to stick to your budget, rework it, and if you don’t have one, now’s the time to start! You can find several budgeting tools online to fit your needs, or use the budget worksheet provided by Hills Bank.
Organize your financial records: Before you can manage your financial affairs, you need to take charge of important documents. Get a fresh start in 2011 and organize your personal documents into two piles. Basic legal documents such as income tax returns, cancelled checks, and receipts for deductible expenses should be kept until the chance of an IRS audit passes, which is typically seven years following the date the return was filed. Items that are difficult to replace should be stored in a safe deposit box including birth certificates, Social Security cards, car titles, and insurance policies. Keep a copy of each of these documents with important documents in your home so you'll always remember what is in your safe deposit box.
To help you organize your financial records, Hills Bank has created a Personal SAFEkeeper. Simply print the PDF document and assemble into a large binder or filing system.
Pay yourself first: Take advantage of your employer’s retirement plan. If your company matches, contribute up to the match amount. Remember, if you don’t, it’s free money that you are missing out on!
Create an emergency fund: If you’re young, single, and have no mortgage, strive for an emergency fund that covers approximately three months of expenses. If you have a house, kids, or both, strive for a minimum of six months of expenses.
Protect your assets: Now is a great time to look at how you protect your assets through home, life, disability, and health insurance. Make sure you and your property are adequately covered. If you are uncertain about insuring your assets, contact the Hills Insurance Agency and they will be glad to assist you!
Check your credit score: An annual review of your credit report is an important part of financial fitness. It’s one of the best ways to spot identity theft and identify inaccuracies. Your credit report can have a dramatic impact on your financial security and help you identify lingering problems so you can deal with them effectively and move toward an improved credit standing.
Much like physical fitness, it takes regular effort to be effective. And much like dieting, maintaining financial fitness is a lifelong process. The sooner you exercise these tips, the sooner you will be in great financial shape!
Convert Your Pay Raise into a Savings Vehicle
The start of a new year is often when last year’s hard work pays off in the form of pay raises or cost of living adjustments. Instead of using that money to buy a new pair of shoes or the latest tech gadget, think about your wage increase as a savings vehicle for 2011.
Use your wage increase to invest in the full amount that your employer will match to your 401(k). If your boss handed you $500, would you turn it down? Of course not! Getting your full employer match for your 401(k) is no different. Since 401(k) contributions may be deducted from your income before taxes, it doesn’t affect your paycheck as much as you may think.
If you already get the maximum contribution from your 401(k), consider investing in a Roth IRA. Roth IRAs don’t lower your tax bill now, but provide tax-free money for retirement if not withdrawn before age 59½.
If you are already contributing to your retirement fund, consider placing your wage increase into a savings account. The average family doesn’t have the recommended savings for financial emergencies. It’s wise to have at minimum three to six months of living expenses in a savings account you can easily access in the event of a financial emergency.
Converting your wage increase into a savings vehicle is a smart way to increase savings without feeling like you are cutting down spending – plus the pinch on finances isn’t as noticeable. Make your hard-earned raise something that can help you achieve your savings goals – you’ll be thankful in the long run!
Iowa City Area Home and Builder Show 2011
See thousands of home, remodeling, landscaping, and decorating ideas come to life at the 2011 Iowa City Home and Builder Show. Plus, you can meet face-to-face with local contractors and material suppliers that will help you enhance your home’s comfort, functionality, appeal, and value.
Coralville Marriott Convention Center
• Friday, January 21: 5 – 9 pm
• Saturday, January 22: 10 am – 6 pm
• Sunday, January 23: 10 am – 4 pm