New resolutions for self-improvement and advancement seem standard at the beginning of each year. One of the most common resolutions is the goal to improve personal finances. Saving more and spending less seems like the simple solution, but if it were that easy, would it be a top five resolution for most Americans each and every year?
Check out the tips and suggestions below to learn how you can improve your financial health over the next twelve months:
Track your spending and increase your savings.
This task cannot be emphasized enough. You will never gain control of your finances if you have no idea where your money is going. The very first step you need to take (if you have not already) is enrolling in MAX Online Banking and downloading our MAX Mobile Banking app. With these tools, you can view the balance of every account you have at MAX instantly. You can view your transactions and pinpoint where your money is headed.
Once you have MAX Online Banking and the MAX Mobile Banking app, the next step is to utilize Smartfolio. Getting started with Smartfolio is simple. Your MAX accounts are pre-loaded into Smartfolio, so you’ll see them the very first time you sign in. You can also add other financial related accounts to it as long as you have an online username and login. Add your retirement accounts, investments, other financial institution relationships to get a holistic picture of your finances, including net worth projections!
With Smartfolio you can create a financial calendar, categorize and track expenses, set and achieve financial goals, identify ways to save, track upcoming bills, and receive email and/or text alerts when money is being spent.
With all of the available tools, there is absolutely no excuse for not knowing the status of your account or where you happen to spend your cash. Identify the trouble spots in your spending habits, and resolve them. The key is to keep as much of your hard-earned money as possible. Don’t be so eager to give it away. Use smart tactics to build your savings.
Along with building your savings, think long-term. Be sure to take advantage of your company-sponsored retirement plan, if available. Vow to increase your percentage contribution to the plan if possible. You should also consider contributing to an IRA or Roth IRA. You want to maximize your ability to contribute to your retirement buckets, as well as pad your emergency fund. And don’t forget to look at your opportunities to invest in the stock market. MAX’s Wealth Management team can assist you in developing a full financial plan for growing your savings and retirement accounts.
Ask: How long can you live on your savings? If you don't like the answer, there's work to do. Allow MAX to assist you in developing a plan.
Regardless of how you get there, increasing your savings will improve your overall financial health. If you’re looking for suggestions on improving your ability to save, check out these 18 tips to help you save more cash in 2018.
Set clear financial goals and stick to a budget.
After you know where your money is headed, it is much easier to develop a smart monthly savings plan and stick to it. Again, Smartfolio can help you with this task. MAX’s Smartfolio makes budgeting easier than ever by giving you the tools you need to successfully manage and track your finances.
The basics to building out a budget:
- Define your income. Only count what you bring home. This is what you have to work it. Accept it and plan accordingly.
- Define your needs. This includes all of your bills, necessary expenses, and your contribution to your emergency fund. Your budget must cover all of your needs.
- Automate all that you can. You must allocate your money for specific purposes, and the goal of automation is to make this effortless. Use online bill pay, automatic transfers, and other automated tools and services to ensure your money goes where it should. If you take advantage of the tools available, your savings will never mix with your bill money.
- Track your progress. Use MAX Mobile Banking to stay informed. Make sure your bills are being paid and your savings is growing as expected.
After creating your budget, the next step is to make your savings goal clear. Write it down. Make it a priority and refer to your goal daily. Now that you know where your money is headed, you have a better idea of how and when you will meet your goal.
Manage lifestyle inflation.
As you grow in your professional career, you tend to make more money. As a result, many of us tend to spend more as well. This is known as lifestyle inflation, and it can become an absolute killer of your financial health. Not only does lifestyle inflation limit your ability to build wealth now, it kills your ability to save for retirement.
We know what you are thinking: How can making more money sabotage your financial health?
The answer is simple. Having more money to spend often gives people a false sense of financial stability and safety – after all, if you can survive on a $29,000 salary, you most certainly can survive on a $35,000 salary, right? The issue isn’t how much you make, but what you do with it. If your expenses increase every time your income increases, you are not improving your financial health.
The temptation to flaunt your growth in income can ultimately lead to failure. Sure, your neighbor may have a new vehicle, a fancy boat, and take expensive vacations – but they may also live paycheck to paycheck and not a single nickel saved for retirement. A major key to financial health is the ability to handle the unexpected. One crisis can ruin your neighbor’s entire future – while the same crisis for you is merely a speed bump. Don’t compare and contrast your financial health based on what you observe with your eyes. The true test of financial health is how the road of life is handled over time.
When thinking about your financial health, always consider the big picture. You can build habits today that will pay off big just a few years from now. In today’s uncertain times, it’s always better to live as a person who saves rather than a person who spends.