OKLAHOMA CITY – With 2017 fast approaching, now is the perfect time to make some financial resolutions to help you ring in the New Year with confidence. According to a recent study of more than 5,000 American adults from GoBankingRates, the top three resolutions were saving more, paying down debt and increasing income, in that order.
While increasing savings and decreasing spending are always important goals and a great place to start, don’t feel like you have to stop there, say financial planning experts at the Oklahoma Society of Certified Public Accountants (OSCPA). Whether your current economic status has you depressed or you’re ready to change the way you look at money, the OSCPA offers 10 tips to building better financial resolutions.
- Make your goals flexible. How have your finances changed over the last 12 months? Will they change over the next 12 months? Have you set any financial goals yet? Not sure? No problem – now is the perfect time to get started. Divide your goals into two categories, long term and short term. Then you can create your own road map to meeting each set of goals.
- Put together a smarter spending plan. Yes, this is one of those back-to-basics suggestions, but it should also serve as the foundation for every financial decision you make. Make a list of your expenses, deduct it from your income, and you’ll see where you stand. You may need to trim some expenses to be sure you have enough to live within your means and still contribute towards your future financial goals.
- Create an emergency fund. Like saving more and spending less, being prepared for an emergency is an important part of your financial security. Unplanned expenses happen so make sure you’re prepared for the unexpected. Experts suggest setting aside three to six months’ living expenses for when you need it most.
- Save for a down payment. Financial lending is tight, but many Americans still hold onto the dream of owning their own home. If homeownership is one of your long-term goals, start saving. Depending on real estate prices in your area, you need to be prepared to make a down payment of 10 to 20 percent. If you can make a 20-percent down payment, you avoid having to pay private mortgage insurance, so there’s an incentive to reach that level. It may take you a little longer to reach your goal, but going back to those basics of saving more and spending less will help you on your way.
- Prioritize your debts. Most people generically say they want to pay down their debt, but not all debt is created equal. For example, credit cards with high interest rates should top the list of debt you want to get rid of first.
- Don’t forget about retirement. It can be difficult to think about retirement when it might still be a long way off, but don’t be fooled into a false sense of security just because you think you’ve got time. If you don’t have one already, open an individual retirement account (IRA) – your CPA can help you decide whether a traditional IRA or a Roth IRA is best for you. Be sure to keep contributing to your 401(k) if your employer offers to match your contributions. It’s not every day free money is thrown your way, and that’s precisely what your employer match offers you. Maximize those contributions.
- Review your income tax situation and estate plans. Are you getting a large tax refund? Have there been changes in your tax situation? Are you part of a two-income couple that will only have one income due to a job loss or pregnancy? Have you changed from being an employee to being self-employed or vice versa? Have you or your spouse retired and started receiving pension income or attained the magic age of 70 1/2 and now must begin receiving mandatory IRA distributions? You may need to change your withholding in order to avoid unpleasant surprises. And, you don’t have to live in a mansion to need an estate plan. Anyone with assets can, and should, have an estate plan. Your CPA can guide you and help you make good decisions on all these questions.
- Be aware. Be involved in your financial good health. Keep your credit history clean, pay attention to your credit reports and know when something changes. Make it a resolution to check your credit reports at the beginning of each year. Keep a close eye on your bank account statements and credit card statements so you know when something is amiss.
- Ask for help when you need it. An occasional check up from a CPA can help you make sure you’re on the right path to achieving your goals. Know when you can go it alone and when you need expert advice.
- Get smart. Just because you may turn to an expert for advice doesn’t mean you should leave all of the important decisions to someone else. Educate yourself about your financial situation and different investment options. Take classes, read books or magazines or talk to others. Know enough to take an active role in your finances.
“A new year brings new opportunities,” said OSCPA Executive Director Blaine Peterson, CPA, JD. “It’s the perfect time to evaluate your position, set new goals and make changes as needed. It can be a fresh start to a new financial future.”
CPAs offer expert advice on a wide variety of financial concerns, including constructing smart, attainable money goals. If you don’t have a CPA, get a free referral and free 30-minute consultation at www.FindYourCPA.com. For more advice on wise spending and investing, visit www.KnowWhatCounts.org, where you can sign up for an e-newsletter, request a speaker and more.
-Story contributed by Dollars & Sense