Get started on a plan with these helpful tips to help you kick-start the new year on the right financial track.
The new year is just around the corner, making it the perfect time to check in on your finances to ensure 2023 paves the way to a healthy and secure future. Get started on a plan with these helpful tips to help you kick-start the new year on the right financial track.
Assess your financial status
Before you can know where you’re going, you’ll need to understand where you currently are with your finances. Take a look at your income, savings, debts, and investments. Pay close attention to what you’re prioritizing and evaluate whether or not you’ll need to adjust to fit those needs.
Review your credit report
If you’re planning on making any big purchases in 2023, it’s a good idea to get a copy of your credit report to see if your score is where it needs to be. A bad credit score can affect your ability to finance and limit your chances at a low-interest rate. Take advantage of your free yearly credit report by visiting AnnualCreditReport.com. Review your report, make sure you report any errors, and look for opportunities to enhance your score.
Hughes members have access to CreditSmart, a comprehensive credit score program that helps you stay on top of your credit. You get your latest credit score and report, an understanding of key factors that impact the score and see the most up-to-date offers that can help reduce your interest costs or lower your monthly payments.
Update your goals
Examining your financial status will give you a look at what you can realistically achieve, and with that in mind, you can create new goals. How much are you going to put towards saving and paying debt? Take some time to prioritize what’s important in your life to help you stay focused throughout the year.
Create a new budget
Once you’ve got a view of your finances, it’s time to
create a new budget. A budget aims to match your income with your expenses to help you control any overspending and allocate more toward your goals. The formula is simple–if your income is greater than your expenses, consider contributing more to your savings or goals. If your expenses are greater than your income, you’ll need to make some adjustments and cut costs where needed.
Pay down your debt
Consider one of the two most common debt payoff strategies: the power pay and snowball method. The power pay method involves paying off the highest interest rate debt while making minimum payments on the other debts. The snowball method goes the other route, tackling the smallest debt first, then the next smallest, and so on. If you’re one to need encouragement, the snowball method affords you small wins giving you the momentum to keep going.
Build an emergency fund
It’s not the most fun thing to save for but having an emergency fund to cover unexpected costs is essential to help ensure you don’t fall into a dangerous financial situation. It’s recommended to save six months of living expenses in an emergency fund account but if that amount seems difficult, try saving as much as your budget allows.
Maximize your retirement contributions
Even if you’re already taking advantage of an employer plan like a 401(k), 403(b), or 457, you and your spouse can each still contribute to a traditional individual retirement account (IRA) or a Roth IRA, depending on your combined taxable income. As of 2022, an individual can contribute up to $6,000, which increases to $7,000 if you’re over the age of 50.
Make a plan to help you accomplish your goals
Staying organized, maintaining a budget, and paying bills can sometimes be a little overwhelming, especially when you mix in everyday tasks and family obligations, so it’s important to utilize tools and develop habits to help you juggle it all. Explore different money apps like Hughes’
myHUB digital banking app to help you track, monitor, and learn from your finances.
Designate a day and time each week to help you make time to review your finances often. Use this time to pay bills, adjust your budget and check your accounts for any fraudulent activity or spending leaks you can take care of before they add up.
Our commitment to you
We believe that confidence starts with knowledge. That’s why Hughes Federal Credit Union is dedicated to providing its members and the community with the financial know-how to take on life’s many milestones.
With free online personal finance training through our interactive MoneyCoach resource page, you can stay financially fit to help you make the best decisions for yourself and your future. Discover various learning topics such as building emergency savings, mortgage education, and retirement planning to help in every stage of life. Visit HughesFCU.org/MoneyCoach to learn more.
*This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal.