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Get Financially Fit!

Get Financially Fit!

January 14, 2022

The New Year is a great time to start fresh. Whether your goal is to be more organized, improve your physical fitness, or create a budget for future savings, now is the time to start your momentum for 2022. During this time of preparing for the year ahead, we recommend assessing your finances as part of your “New Year, New You” goals. Taking control of your personal finances will allow you to save and prepare for unexpected expenses. At Willis and Machnik, we enjoy assisting our clients by providing a holistic approach to ensure your most important financial goals are met.

If you want to get financially fit this year, here are some tips for you to focus on:

Get Organized

Getting organized is not a one-time event and requires a sustained effort. However, there is good news – once this becomes a habit, it will eventually take little to no effort as it will be second nature at this point. Being organized is essential if you want to make better decisions, enjoy your time, and gain peace of mind. Establishing a routine, making a list of important tasks, and utilizing a calendar or planner are all steps in the getting organized process and can help you focus on your long-term financial goals.

Start the new year with an organizational system. Alphabetized file folders or similar filing systems are a great starting point, especially as you prepare for tax season. While you're getting organized, consider buying a shredder to keep your personal information safe from identity theft.

Create a Budget

Budgeting allows you to create a spending plan for your money and ensures that you always have enough money for the things you need and what is most important to you. If you are currently in debt, following a budget will help you work your way out of debt and can help keep you out of debt. There are many free budgeting spreadsheet templates online that can help you create your budget. We recommend including as much information as you can and to review your budget regularly. You might consider sharing your budget with your partner to keep everyone in the house on the same page.

A budget assists you:

  • By showing you how you spend your money.
  • Helping with setting realistic goals.
  • Tracking your spending (but make sure you review your budget often.)

Reduce your Debt

Debt from student loans, mortgages and credit cards can be unavoidable for many individuals. On average, Americans carry $6,194 in credit card debt, according to the 2019 Experian Consumer Credit Review. Spending more than you earn can cause unnecessary stress. When you establish a budget, it makes it easier to stick to your plan, pay down debts, and continue to save money.

Things to consider when paying down debt:

  • Pay off the most expensive debt first.
  • Pay more than the minimum balance.
  • Take advantage of balance transfers.
  • Halt tour credit card spending.
  • Delete credit card information from online stores.

Save for the Unexpected

Saving is important; it ensures a comfortable future that can endure financial surprises. No matter how old you are, it's never too late to begin saving. Contribute at least the maximum amount that your employer will match, and consider raising your contribution as your income increases. Contributions made to employer-sponsored retirement plans are tax deductible. Beginning in 2022, the contribution limit for an employee that participates in 401(k), 403(b), and most 457 plans increased $1,000. The limit in 2022 is now $20,500, up from 2021’s limit of $19,500. If you were contributing the maximum in 2021 and want to continue doing this in 2022, you will want to review and adjust your contributions to take full advantage of the higher limit.

If you receive direct deposit at work, consider sending a specific dollar amount to your savings account. The money will be hidden away from you in an account before you have a chance to spend it, and this is an easy and convenient way to save. If your employer doesn't offer direct deposit, ask your bank or credit union for information about automatic transfers from your checking to savings accounts.

Don’t Stress

Be realistic with your goals and make sure to pivot if circumstances in your life change. Stay on top of your goals and your budget so you can track your progress during the year and always review your goals and objectives with your financial advisor. The cornerstone of our mission at Willis and Machnik is becoming your wealth management partner, so do not hesitate to reach out to get financially fit with us today!