Thursday, April 15, 2021

Financial Planning 101 for 2021

Piggy Bank Graphic McHenry Illinois

While most people start New Year’s resolutions in January, there’s nothing magical about the start of the year when it comes to improving your finances. With tax time upon us, now is a great time to review your current finances and set goals for the rest of the year. If you’re ready to make a change, it’s not too late to start!

Here are some habits that you can start today to improve your financial fitness in 2021 and beyond:

Live Within Your Means

Sometimes it can be difficult to live within our means, especially if we find ourselves living paycheck-to-paycheck. The best way to cut expenses is by making a monthly budget. Calculate how much income you (and your partner) bring in monthly, and subtract necessary expenses such as mortgage or rent payment, car payment, utilities, and groceries. Reduce spending in leftover areas, such as eating out, impulse purchases, shopping, and entertainment. Look for ways to reduce other recurring expenses. Some ideas include shopping around for lower insurance rates, canceling subscriptions and memberships, couponing, buying bulk, and buying sale items to reduce grocery bills.

Build Your Emergency Fund

Financial planners recommend saving at least two paychecks in your checking account for unforeseen expenses. Once you have that saved up, aim to have an emergency fund of six to nine months of income in a savings account, where it can accumulate interest but still be withdrawn if needed. Unplanned expenses include car repairs, medical bills, job loss, and more. It may take a while to save these funds, but after you’ve made your budget and reduced expenses, your next priority should be to set aside an amount from your paycheck each month. Keep saving until you’ve built up your cushion.

Pay Down Your Debt

Paying down debt, as well as avoiding future debt, is key to financial success and security. Eliminate your “bad debt” first, including credit cards, car loans, and any other loans that have high-interest rates.

Increase Your Retirement Savings

Financial security and stability also involve saving for the future. After you’ve completed the steps above, increase contributions to a retirement account, such as an employer-matched fund or a Roth IRA. If you haven’t started to save for retirement, it is never too late to start, but begin now. It is ok to start small but plan to increase your contribution as you become more financially stable. There are plenty of online tools and resources as well that are worth checking out to help offer some guidelines on how much to set aside over a given period.

No matter what your current wealth is, financial stability is within your reach with some careful planning. If you’re ready to take control of your financial security, consult a financial planner today.

At McHenry Savings Bank, we work hard to earn your trust by seeking to understand your financial needs and goals. We can then provide investment and insurance solutions designed to meet the needs of our customers. Visit our website to learn more about our services call us at 815-385-3000 to speak with an expert to discuss your personal financial goals.

 


Sources

https://www.mchenrysavings.com/Services/cd_savings.html

https://zenhabits.net/10-habits-to-develop-for-financial/

https://www.thebalance.com/how-to-make-a-budget-1289587

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