How to Reach Financial Goals Worth Celebrating
Reflecting on the past year, are you thankful for having reached certain financial goals? Perhaps you’ve set aside a target amount in retirement savings or reached a certain level in a fund for a future expense, such as a child’s college tuition or a house.
The holiday season is a time when many evaluate how they did on their most recent New Year’s financial resolutions. If you’ve got plenty of cash for gifts and other holiday expenses, you probably did well on your savings goals. But if you’re struggling to come up with the money you need, it may not feel like there is much to celebrate on the financial front.
Now is a good time to think about setting objectives for next year so that when Thanksgiving 2015 arrives, you’ll have a shot at being financially thankful.
As Easy as One, Two, Three
How can you ensure you have something to celebrate financially at Thanksgiving—if not this year, then in 2015 and beyond? Follow these three steps.
- Establish a budget and stick to it. A budget starts with recognizing priorities and cutting out the unnecessary indulgences, such as a daily pumpkin spice latte. See where you can cut expenses that aren’t vital, and bolster your savings.
- Avoid credit card debt. Try not to buy things using a credit card unless you can completely pay off the balance each month. A variable interest rate can quickly run up your debt, especially when rates range close to 23%. Avoid swiping the card unless you can pay it off with the next bill.
- Consolidate your debt. See if you can get a lower interest rate on debt, whether it’s tied to credit cards, school loans or other expenses. Consider taking out a home equity loan or line of credit, or even a personal loan to reduce your costs. With the Federal Reserve taking steps that may push rates higher starting next year, now may be the last time for a while that you’ll be able to lock in low rates.
If sticking with a savings plan has proven too challenging, consider setting up an automatic deposit system through your financial institution. A specified amount will be withdrawn from your earnings and plugged directly into a savings account or retirement fund. By salting it away, you can eliminate the temptation to spend the money on unnecessary items—as the saying goes, out of sight, out of mind.
And don’t forget to keep your eyes on the prize. Next year at this time you may find that, financially speaking, you indeed have plenty for which to be thankful.
Cait Klein, NerdWallet