Financial Health in the New Year

Published Dec. 5, 2017
By Maj. Scott Schofield

PETERSON AIR FORCE BASE, Colo. -- Big holiday dinners with your family and friends, vacations to far-flung locations, and the joy on a child’s face when they open the perfect present. The holiday season is indeed full of priceless moments.

But they don’t come cheap and those big dinners, travel expenses, piles of presents, and a myriad of other holiday-related expenses can do serious damage to any spending plan.

It’s no surprise then that many New Year’s resolutions involve improving financial health in the coming year. But where to start? Well, below are five tried-and-true strategies that can help guide you towards financial success.

1. Establish SMART financial goals that are specific, measurable, achievable, realistic, and time-bound. For instance, replacing generic goals such as “pay off debt,” or “save for retirement” with clear goals such as “pay off $2,000 of credit card debt by the end of the year,” or “save $300 per month for retirement” will make it much more likely that you will stick with and realize your goals.

2. Establish a spending plan. Identify your income and expenses and then develop a plan on how you would like to spend your money in the coming year. Remember that once you have a spending plan, it’s important to stick with it and try to reduce impulse buys.

3. Prioritize debts. Track all of your debts and organize them by their annual interest rates. Then develop a repayment plan that avoids late fees on all of the debts while prioritizing repayment of the high-interest debts first. Remember that paying off debt represents a risk-free and tax-free return equal to the interest you avoid paying.

4. Automate your savings. Set up a regular monthly savings amount to a deposit account(s) that goes out the same day you get paid. This helps you follow through on your savings goals because the cash is drawn directly from your bank before you can get your hands on it and buy today’s must-have item. Remember to re-evaluate your savings amount regularly and increase it whenever you receive a promotion or salary increase.

5. Save for retirement. While many of us are still young and bullet-proof (some more than others), retirement will come before you know it. Two great ways to save for retirement are through employer-provided plans such as 401(k) plans and the government’s Thrift Savings Plan, or through Traditional and Roth Individual Retirement Accounts. Remember to only save amounts that you can realistically afford, as contributing more may result in having to incur costly debt to cover everyday expenses.

Of course, these five strategies are merely intended as a rough guide since financial planning strategies can be very complex and vary wildly depending on your unique circumstances. Therefore, it is usually wise to seek the advice of a financial planner or accountant before engaging in a new investment strategy.

Fortunately, for those of us without professional advisers on retainer, the 21st Force Support Squadron has a Personal Financial Readiness Team that can provide information, education, and personal financial counseling that can help you maintain financial stability and reach your financial goals. They’re a great resource if you’re interested in learning more about financial planning, credit and debt management, home and car buying, saving, investing, consumer protection, and general money management.

You can find additional information about the services they provide by visiting https://www.21fss.com/about/airman-family-readiness/personal-financial-readiness/ or calling 719-556-6141.

Happy New Year!