Being financially healthy takes attention and discipline. But you can’t determine where you’re going if you don’t know where you currently are. That’s why this time of year is the perfect time to do a financial review.
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Transcript:
Welcome to Money Tip Tuesday from the Making Money Personal podcast.
As 2023 comes to an end, it’s a great time to think about your financial goals and plan for the New Year. Taking some time in the next month or so to look ahead at your budget, credit, and investments is the best way to help you define your financial objectives, recognize your financial success and failures of the previous year, and make improvements in the New Year.
Set aside some time in the next month to look over these three important financial categories and determine how you stand.
First is your Budget
Think about your budget over the past year. What things worked for you? Did you find it easy or hard to stick to your budget?
Reviewing your budget helps you determine your financial status by looking over your assets like income, savings, and retirement contributions. Ask yourself if something changed in your finances. Did you get a new job? Did you buy a new car? A new house? All new financial changes should be factored into your budget so you can update it accordingly.
Next, you’ll want to look over your liabilities such as loans, credit cards, and monthly expenses including your mortgage and utility bills. Ask yourself if any of your expenses went up. Did you pay off a credit card? Did you get a new loan? Sign up for new subscriptions? Take note of all these changes to determine how many new or increased expenses you’ll have going into the new year.
After reviewing your assets and monthly expenses, you can now determine where to make improvements such as removing certain expenses or subscriptions, paying off credit cards or increasing retirement contributions.
Next, Monitor and Review Your Credit
Do you know what your credit score is? If not, do you know how to find out?
Your credit score helps lenders determine your credit worthiness when it comes to borrowing money for things like a car or house. If you intend to take out a loan at some point, you’ll need a credit score, and a good one at that. The higher your score, the more likely you’ll get a lower rate. Which means you’ll have a lower monthly payment. Take time to look over your credit score and determine if it needs improvement.
There are many resources available to check your score, like the top three credit bureaus, TransUnion, Equifax and Experion, if you have a credit card, many credit card companies provide it, and you can also get it through a Triangle Better Checking account with ID Protect.
Once you know your credit score, set new financial goals towards your credit. Reevaluate ALL your credit cards and determine which ones you want to continue using, which ones to remove, and which ones you need to focus on paying off. Determine which ones to keep or remove by reviewing the perks of the credit cards and weighing any cons like interest rates.
Lastly, Review Your Retirement Savings and Investments
Saving for retirement in an individual retirement account (IRA) or a 401(k) is one of the best ways to prepare for your future. Do you have a retirement account? How much have you been saving? Do you know if you’ll have enough saved when you’re ready to retire?
As you review your annual financial plan, look at your retirement accounts and check their balances.
If you have multiple accounts, consider whether you should roll any old 401(k)s over into another if necessary and determine whether you should increase or decrease your annual contribution. For any other investments, like a brokerage account, it’s important to keep an eye on the status of those investments when you do the annual financial planning review so you can decide whether to trade out any bad or underperforming investments.
If you haven’t paid much attention to your retirement planning but you know it’s something you need to do reach out to Triangle for financial planning services that will help you put together a sound retirement strategy.
If there are any other tips or topics, you’d like us to cover, let us know at tcupodcast@trianglecu.org. Like and follow our Making Money Personal FB and IG page and look for our sponsor, Triangle Credit Union on social media to share your thoughts.
Thanks for listening to today’s Money Tip Tuesday and be sure to check out our other tips and episodes on the Making Money Personal podcast.
Have a great day!
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