As the end of 2016 quickly approaches, many consumers will begin to think about their financial goals. Consumer debt or any other credit card debt can get in the way of your finances. The latest update of a University of Scranton study puts “improve finances” as a key financial priority. Therefore, it is important to understand the money must do’s before 2016 comes to an end.
Money Must Do’s Before the End of 2016
Research Employee Benefits
The start of a new year is often accompanied by a renewal or new enrollment into employee benefits. These include retirement savings accounts, healthcare reimbursement, wellness savings and more. Be sure to enroll in an employer-sponsored 401k if available. If you are already enrolled, look for ways to increase your weekly contributions.
Does your company provide a health or transportation reimbursement program? What about a flex-spending account to cover co-pays and other medical expenses? Dedicating money to these can save you hundreds over the course of the year. The best part is that they are pre-taxed dollars. Meet with your HR department to walk through any benefits that you can potentially take advantage of.
Be Pre-Emptive With Saving
Think now about your budget for the coming year so that on day one, you can start an emergency fund for ‘just in case’. An unexpected expense can come your way at any time. The best way to plan for this is to develop a plan to save for at least 3-6 months of expenses. Among others, preparation is a key money must do before the end of the year.
Check Your Credit
According to an FTC study, one in five consumers had an error on at least one of their three credit reports. Five percent of those with errors endured less favorable terms for loans. Therefore, reevaluating your credit is a money must do for all consumers.
Remember that every consumer is entitled to one free credit report per year from each of the credit reporting agencies. We recommend AnnualCreditReport.com to get your free copy of your credit report. Once received, review to ensure its accuracy. If there is any erroneous information, work with the credit reporting agencies to correct them asap.
Pay off What You Can in 2016
Credit card debt problems are one of the biggest financial stresses. Therefore, reviewing your credit report also provides the opportunity to review your outstanding debts. You can then develop a plan to get all of your credit cards paid off. There are different methods of paying off your debt.
The Debt Avalanche and the Debt Snowball methods are popular examples. The Avalanche method suggests you put more money towards the account with the highest interest rate, and then make minimum payments on any other accounts. Once paid in full, apply more funds to the next highest interest rate, and so on. The Snowball method is when you disregard interest rates and pay off the debt with the smallest balance first and so on.
Create and Follow a Budget
The best way to organize your finances and paint a clear picture of your financial situation is creating a budget. Identify your total monthly income and expenses. Break it down into categories so you know how much you are spending in each category (rent, utilities, car payment, groceries, dining out, cell phone bill, clothes shopping, etc.).
If you don’t know how much you’re spending, then track yourself for a couple months. Once you can see how much you spend on everything, you can identify areas to cut back. This will also help you find more money to apply towards your debts or add to your savings.