The change of the calendar brings with it new beginnings while also providing an opportunity to evaluate your finances and build your plan for the future.
A recent WSFS Bank Money Trends study found that 54% of Greater Philadelphia and Delaware region consumers are concerned about their personal finances, reflecting the increased importance of budgeting during periods of uncertainty.
Whether you’re just getting started on your financial journey or well on your way toward your goals, these tips can help you take stock of your finances and budget for success.
Evaluate Current Finances
When building your roadmap for the year ahead, it is important to take a close look at your expenses and income. Regardless of which budgeting strategy you choose, you’ll want to ensure you have a balanced budget and address any deficits quickly.
If you haven’t already set up online or mobile banking, now is a great time to start, as this can help you quickly pull a full snapshot of your accounts and look for cost savings. And with reports of increasing fraud attempts, mobile banking can help you keep an eye on your accounts more consistently. Make sure you alert your bank of any suspicious activity.
Consider making a New Year’s resolution to be more proactive with your finances, which could help you find money you’re currently leaving on the table that could be used to build savings. For example, look into refinancing your mortgage if you haven’t already since interest rates are still very low, or consolidating credit card debt to pay off your balances faster and spend less money paying interest.
The end of the year is also a time when many employees find out if they will be getting a raise, so it is important to account for any upcoming changes in pay, and consider putting additional compensation toward your retirement savings to take advantage of compound interest.
Account for Changing Financial Environment
The world and its financial climate have changed quite a bit over the past year and a half, causing many consumers to re-evaluate their finances regularly.
The WSFS study found that 41% of regional respondents are spending more than they were earlier in the pandemic, but rising prices are holding nearly one-quarter (24%) of them back from making large purchases or buying other products they would normally purchase.
With prices rising quite a bit in recent months, it is also important to look closely at where you do your shopping and hunt for bargains. While shopping at multiple stores can be less convenient, it can help in your search for savings, which can then be redirected toward things like saving for your child’s education or building emergency savings.
Set Goals and Plan for the Future
Once you have a clear picture of your current finances, it is paramount to set goals for both the short and long term.
For example, if you have a wedding on the horizon in the next year, calculate the estimated cost and start building your roadmap for how you will save that much money in the allotted timeframe. Calculating the monthly savings needed to reach this goal may help you identify additional areas where you can make cuts to ensure your budget stays balanced.
If you’re further along in your financial journey and don’t need to save for something in the short-term, look toward your long-term future like retirement. Ensure you’re maxing out any employer matches for your retirement plans so you’re not leaving “free money” on the table and increase contributions when your pay is raised.
If you’ve already reached your contribution limits on employer-sponsored plans, consider opening an IRA or money market for additional long-term savings.
Everyone’s financial situation is unique, so there is no one-size-fits-all solution to achieving your goals. The most important thing is to regularly evaluate your budget and recalibrate throughout the year.
If you’re not ready to set larger goals, start small by saving for a meal at a nice restaurant or a local weekend getaway to build confidence in achieving your saving goals. If you need more help building your roadmap, consider making an appointment to speak with your banker for a financial checkup.
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