It is a new year and it is time to get on top of your financial matters before 2015 gets here. If you do not already have a New Year’s Resolution maybe you should make getting ahead on your finances yours this year. This year more Americans are setting financial goals just behind being healthier as popular resolutions. So where do you start?
First you need to take a look at yourself in the mirror and be honest with yourself. And as I always say you need to first pay yourself before you pay anyone else. And never leave free money on the table in say a company match 401(k) program. Always save up to the point where there is a company match or you are simply giving money away. Or look at it this way with the company match you have an immediate gain on your retirement investment. As a rule of thumb you should aim to save 10% of your salary before taking any matching into account. This is just good retirement and emergency planning and nothing more.
Did you get a bonus in 2013? If so use the thirds rule on it. And that is investing a third or put it in your savings, put a third towards your debt reduction and the final third is for you to treat yourself to something you would not normally do. No one said you could not have some fun while thinking about your financial future and where you need to be. So do not forget to live a little while you make your plans.
I am never a believer of having personal debt other than maybe a 15 or 30 year fixed mortgage so pay off consumer debt as soon as you can preferably on a monthly basis. The average consumer debt in the US is anywhere between $6,500 and $7,500 a family. If you can avoid consumer debt and pay off all your credit card balances in full every month. If you cannot do that make a plan to pay off your debts as soon as possible by creating a functioning budget and a plan to get out of debt. I have created a useful spreadsheet for both that is available at www.fiverr.com. The direct link to my Fiverr page is http://fiverr.com/kgmeyer and both spreadsheets can be found there. Which leads me to the next area you need to always make sure is addressed and that is always have and use a budget to stay on top of your finances. Depending on your circumstances your goals may be vastly different from someone else you know. Some of us have more debt than others. Some people are closer to retirement and have different needs than say a family just starting out. But as a general rule you want your debt to not be more than 30% of your salary and that includes your mortgage. About and equal 25% can go to taxes and living expenses. And as I stated earlier your goal should be to save 10% of your salary and more if you can do that. After all, no one will be taking care of you in your retirement unless you have properly planned so make sure to pay yourself first and save. You can figure at least 15% will go to various taxes. That will leave around 5% to 10% for miscellaneous items and insurance.
Do not wait and start 2014 off on the right foot and become financially sound now!