Five New Year’s Resolutions to Keep Your Financial Life on Track
This year, resolve to maintain your financial health by following these five tips to gain good habits and lose the bad ones.
With the New Year fast approaching, many people will resolve to become healthier by beginning a diet and workout regimen. The New Year also is a great time to improve your financial health, no matter your life stage or financial situation.
Even folks who have little or no banking relationships, often due to situations beyond their control, should use this time to take control of their finances. According to a 2015 FDIC report, almost 27 percent of American households are unbanked or under-banked, meaning that they often have to pay large fees for simple necessities, such as cashing their paychecks.
PNC offers five tips to help anyone stay or become financially fit in 2019.
1. Know your assets and expenses
Prepare a list of all your savings or assets (home, 401(k) plan, IRAs, bank accounts, life insurance, etc.) as well as your expenses or liabilities (mortgage, auto loans, credit card debt, etc.) Many people are surprised to discover how this simple exercise helps them focus on financial goals.
2. Create a budget
You can't set goals for spending and saving without understanding where your money currently is going. Check your bank's online bill pay system to see if they offer a summary of your financial information on the website. Your credit card company also may provide you with a year-end summary of your spending.
As you analyze your spending, differentiate between wants and needs, such as packing your lunch instead of buying it. Much of our overspending is on little things that add up over time. Cutting back on these seemingly minor expenditures can have a positive long-term impact on your finances.
3. Pay yourself first
Set a savings goal. You can start small – perhaps with 2 to 3 percent of your pay -- and gradually grow the amount over time. Set up automatic deposits into a separate account. If your employer offers a 401(k) plan with a match, try to at least contribute enough to maximize the match. If your employer doesn't offer a 401(k), set up an IRA.
4. Pay off credit card debt
This is likely the highest interest rate debt you have. If you have only been paying the minimum amount required, set a goal to pay a certain amount more each month. And through creating a budget and setting savings goals, you should be able to find ways to decrease spending on the "wants" and reduce your use of credit cards. Your ultimate goal should be to charge no more than you can pay off each month. To help reduce spending, consider using a prepaid reloadable card instead of a credit card. With a prepaid card, such as the PNC SmartAccess® Prepaid Visa® card, you can only spend the amount that you’ve loaded onto the card.
Yaking McNeil, 38, of Detroit found this solution to be a big help. He had foot surgery a few years ago and wasn’t able to work for eight months. He fell behind on his bills and became one of 9 million people who are unbanked.
“I was paying over $100 a month in check cashing fees for almost five years,” he said. “I went to open a checking account and they said I wasn’t eligible.”
McNeil, who works two jobs averaging 70 to 80 hours per week, talked with a PNC banker about his options. He signed up for a PNC SmartAccess® Prepaid Visa® card, which has a monthly service fee of $5.
“My SmartAccess® card helps me avoid check cashing places and have my money direct deposited the day I get paid,” McNeil said.
5. Plan for the long-term
Documents that everyone should have include a will, durable power of attorney, medical power of attorney, directive to physicians (living will), and a HIPPA (medical privacy) release. If you have minor children, a will is necessary for naming a guardian in the event of your death. The importance of these documents cannot be overemphasized. Review these with your closest family members so they know where the documents are in case they unexpectedly are needed.
Learn how to create a budget »
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