Tips for Recovering Your Finances After the Holidays

If you overspent during the holidays this year, you’re not alone. According to a survey, 36% of consumers went into debt during the holidays, owing up to an average of $1,249. Regardless of how much you owe, there are steps you can take to help recover your finances after the holidays are over. Here’s what we recommend for building your finances back up after an expensive holiday season.

Assess Your Finances

The first thing you’ll want to do is assess your overall financial situation. This includes fully understanding your monthly budget and determining your short and long-term financial goals. Then create a spreadsheet of your expenses, debts, payment due dates, and interest rates. If you’re new to budgeting, our make a budget worksheet is a great place to start.

Cut Unnecessary Expenses

Once you’ve fully mapped out your budget, you should have a better understanding of where you spend your money most. You’ll likely notice there are expenses from products or services that you don’t need or even use. When paying off debt or building savings, it’s best to trim down your expenses as much as you can. For example, you can cancel any underused subscriptions that you might have forgotten about. You can also try cutting back on frivolous expenses like dining out, Starbucks coffee, or delivery services. If the purchase is for something non-essential, see if you can find a less expensive version or cut it from your budget entirely.

Evaluate Credit Card Usage

Take an inventory of all the credit cards you’re using and evaluate if they have any rewards or annual fees. If you’re using cards with high fees or you’re carrying debt across multiple accounts, consider consolidating your debt with a balance transfer to a low-rate credit card. This way you can pay down your balance without the extra interest. It’s also recommended you find room in your budget to pay more than the minimum monthly payment. This will not only help you pay down the debt faster but will help your credit score, too.

Start Planning For Next Year

It’s never too early to start planning for the year ahead. Start by putting away $50 a month toward holiday gifts for the end of the year. Before you know it, you’ll have enough funds to cover gifts for your family and friends. Make a list of the people you’re buying gifts for now, and potential ideas to see how much you’ll need to save up for. Some items will likely be cheaper to buy out of season, which will help with your overall holiday budget for next year.

Whether you need assistance with debt repayment, creating a budget, or even opening an account, First Financial can help! Visit one of our branch locations or contact us to speak with a representative today.

 

Get a Fresh Start to Your Finances with these Resolutions

Entering the new year means setting an annual resolution. Whether you’re looking to better your wellness, career, or relationships – there’s one resolution that’s crucial to all aspects of your life: improving your financial fitness. Rather than investing in a pricey gym membership or a resolution that’s difficult to stick to, take the opportunity to set financial goals that are easier to achieve than you think. Here’s our guide to getting a fresh start to your finances in 2022.

Create a Budget

Creating a budget may sound scary, but it can actually be very empowering once you’ve finished. Having a full understanding of your income and expenses can help you be more aware of your financial state and help you save more money down the line. There are steps you can take to make the process easier.

  • Review your expenses from 2021 to see where you spend your money and how you can better save.
  • Create a list of essential spending categories such as rent, food, transportation, clothing, internet, cell phone, insurance, etc. – and write down how much you spend on each.
  • Add up your monthly income and deduct your expenses. The amount left can be used toward building savings or on entertainment.

When building a budget, it’s recommended to use the 50/30/20 concept when planning out your expenses. Meaning, 50% of your income should go toward necessities, 30% on wants, and 20% on savings and debt repayment.

Reduce Debt and Improve Your Credit

Speaking of debt repayment, another goal to make for yourself in 2022 is to work toward reducing any debt that may be lingering. To start, make a chart of everything you owe and organize it by the size of the debt and interest rates. Check your credit score to better understand your financial fitness and where there’s room for improvement. Then, calculate what you owe and use the monthly budget you created to build a realistic repayment plan.

To prioritize debt repayment, you’ll need to trim your budget and eliminate any unnecessary expenses that are not essential. We also recommend refraining from using credit cards and allocating cash for your needs instead. While this is not ideal, a tight budget will only be temporary until you’re in better financial standing and your credit score improves. Plus, you can always treat yourself once you’ve achieved your repayment milestone (within reason, of course)!

Build Your Savings

Having a savings account is essential whether you need an emergency fund, money for retirement, or to buy a home. While it may sound daunting to build and maintain a savings account, the key is to start small. You’ll want to first evaluate what you’d like the savings to be for and how much you’ll need. Then, dedicate a certain amount of your paycheck to go toward your savings and make the transfer automatic. While it’s recommended to keep 20% of your income for savings and debt repayment, you’ll need to evaluate what works within your budget and when you’ll need the funds. Even if you’re starting with $25 per paycheck, you’ll be surprised how quickly the account will grow without you even thinking about it.

If you need help with creating a budget, managing debt repayment, or building savings, the team at First Financial is here to help! Visit one of our branch locations or contact us to speak with a representative today.

 

How to Shape Your Finances in a New Year

This is a good time to make sure your accounts are ready for whatever may come your way in these unprecedented times. Here are a few ways you can make sure your finances are in decent shape as we begin 2021.

Stop acting on impulse: Think about your spending habits. Do you make impulse buys whenever you want? No matter how big or small, impulse purchases can lead to trouble. If you have several entertainment subscriptions, do you know which ones you’d cut if your budget suddenly needed to be tightened? If last year taught us anything, it’s to expect the unexpected. Save as much money as you can, don’t overspend on unnecessary things, and try to keep a tight reign on your budget each month.

Know how to use a credit card: Enjoying the use of a credit card can be risky if not properly managed. Even if you find it easy to pay off your purchases each month and you love earning credit card rewards, what will you do if your financial situation takes an unexpected turn or you lose your job? Don’t spend above your means, and try to always pay your credit card bill off each month so you’re not racking up debt plus interest.

Look ahead to your future: Have you saved enough to enjoy retirement one day? Are you going to be able to leave something to your loved ones? There are often a lot of questions when it comes to your financial future and retirement. Even if you don’t have a child to be your beneficiary, most people are living longer than ever these days and you’ll want to make sure you don’t outlive your savings. If you haven’t checked in with your financial advisor lately, use the unpredictability of last year as an excuse to at least have a quick conversation with them.

Did you know First Financial has an Investment and Retirement Center which offers complimentary retirement consultations to our members?*

Contact one of our Financial Advisors today!

*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source: CUInsight.com