Money matters...
It is fitting that this month’s college readiness article is about money and finance and today’s blog post is about checking in on your money/finance goals for the year. So, let’s dive right in…
If your goal is to spend less, then track your spending and check it monthly. You can use this to help you create a more accurate household budget.
If your goal is to pay down debt, start with the debt with the highest interest rate and pay as much as you can (pay the minimum to other debt). Now see how much you are down for the year. If this debt is a credit card debt, consult a financial specialist or banker before closing the account when the debt is paid off. I learned a few years ago that closing a long-time credit card would hurt my credit score more than a more recent account. And if this is the case, simply store it in a safe place that is not your wallet.
If that debt is college loans, start with paying extra toward the principal when you can. You can even set up autopay to ensure you don’t miss a payment (Ryan Lane, NerdWallet). Other options are if you have a good credit score, consider refinancing and/or continuing to pay in a grace/deferment period).
If your goal is retirement savings, then… “Aim to save at least 15% of your pre-tax income1 each year, which includes any employer match. That's assuming you save for retirement from age 25 to age 67. Together with other steps, that should help ensure you have enough income to maintain your current lifestyle in retirement.” — Fidelity Investments And parents, keep in mind, you should save for retirement before saving for college. Why?
College can be funded with financial aid and loans, but retirement cannot
Retirement savings have more time to grow
Retirement is a much bigger financial goal and requires more time and savings
College isn’t for everyone — your child may decide not to go in the end — Earlybird
Saving for a rainy day? According to Chase Bank, “Generally, your emergency fund should have somewhere between 3 and 6 months of living expenses…That doesn’t mean 3 to 6 months of your salary, but how much it would cost you to get by for that length of time. Include expenses like rent, utilities, debts, and food, and don’t take into account non-essential luxuries that you'll be able to eliminate if needed, such as entertainment and dining out.”
And now the disclaimer: I am not a financial professional. If you have any financial questions or are unsure about financial matters or general money questions, etc., please consult a financial expert or banker. Heck, this is what I do.