5 Tips For Saving And Getting Your Finances In Order In 2017 From An Expert

January 6, 2017  |  

We’re not only trying to help you reach your weight loss goals in 2017, but we’re also looking to help you forgo some of the same money issues and worries you dealt with last year. Or better yet, we’re trying to get you motivated to create the financial habits that will pay off big time down the line.

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Want to get serious about saving but don’t know where to start? Trying to bounce back after going into a bit of debt during the holidays? Want to beef up a 401(k) that your job can’t match or just need to curb your spending habits? We asked Jocelyn Baird of the financial web site (and “independent source for comparing and reviewing the most valuable new Internet services”) NextAdvisor.com about how to do all these things in 2017. No need to keep waiting and hoping that down the line you can deal with your credit debt and really start saving. Check out her advice on how you can be your best fiscally responsible self in this new year.

MadameNoire: After a Christmas holiday that has left many in a hole, what advice do you have for people looking to start the new year off right by getting their finances in order?

Jocelyn Baird: One of the most important first steps anyone can take is to create a budget. This can be achieved by adding up all of your expenses, starting with those that cover the necessities (rent, car payment, student loans, etc.) and following up with the extras (Netflix, gym membership, etc.). Once you know how much money you need each month to pay for the important things, you can then take a look at what you have leftover and figure out what you want to do with it over the coming months. Short on cash? Look at eliminating one or more of your monthly extras – maybe you can get by without the gym by switching to walks in your local park and weight lifting in your living room.

MN: What’s a realistic way to tackle the credit card debt?

Baird: If you have found yourself post-holidays with a significant credit card balance, you will certainly want to focus on paying that down as soon as possible to avoid interest. Something that can help with this process is a balance transfer to a new credit card with a long 0% intro APR period on balance transfers. You’ll have more time to pay down your purchases without having to worry that a substantial portion of your monthly payment is being eaten up by interest.

MN: What’s a realistic way to get into saving and stick with it? I know for women in big cities who have so many bills to pay and pricey expenses, it can feel like there’s nothing left to put away for a rainy day.

Baird: If one of your goals is to create a savings, you’ll want to make a plan to designate some of your monthly paychecks to a savings account where it can sit, untouched, until you need it. It might seem as though you can’t spare a single cent, but even as little as $20 to $50 a month set aside will add up over time. Using a savings account separate from your bank, such as an online savings account, can also be helpful in reinforcing the idea that your savings is money that isn’t for daily use. It can be tempting to reach into a savings account you can see all the time, but if you keep your saved money totally separate and think of it as untouchable money, you’ll be surprised at how quickly you can grow and maintain a nest egg.

MN: How should people plan/prepare for a retirement account if the company they currently work for is unable to match what they contribute? Should you instead just try an IRA?

Baird: It’s never too early to start thinking about retirement, especially for those whose companies don’t offer a 401(k). If you do have a 401(k) available to you, it’s wise to save as much as you can afford to take advantage of your company’s maximum match (usually up to 6%), as it’s essentially free money. Money contributed to a 401(k) is tax-deferred until you start withdrawing from it, and you can currently contribute up to $18,000 per year (or $24,000 per year if you’re 50 or older), according to the IRS.

Fortunately, if you don’t have a 401(k) to contribute to, you can consider an individual retirement arrangement, or an IRA. You can contribute up to $5,500 per year (or $6,500 per year if you’re older than 50), and all contributions are made pre-tax, meaning you’ll pay taxes on the money when you withdraw it from the account. Another option is a Roth IRA, which is similar to an IRA but the contributions are post-tax, meaning you don’t get a break on your current tax bill. That said, all of the money you withdraw from the account, including interest, is tax-free, which can save you thousands of dollars over the life of the fund. Keep in mind, there may be a 10% tax penalty if you dip into the account before you are 59½.

MN: What advice do you have for people who love to go out and spend money, whether that be through shopping or going out to eat with friends, but need to get on a more responsible spending plan from month to month?

Baird: When you create your budget, make sure to include some allocations for fun money, but also look for ways to cut out excess spending. It can be difficult when you enjoy spending money to put the brakes on it, but if you focus on finding ways to have fun that don’t necessarily cost as much, you can still go out without breaking your bank. Instead of going out to eat on a weekly basis, save your money and instead go out for a nice meal once a month. If you create goals for your money and keep those in mind, sticking to a more responsible spending plan isn’t so difficult.

 

Images via Shutterstock 

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