January’s Financial To-Dos
Inspired by Morningstar’s Financial To-Do List, we’re offering a few tasks each month for tackling what can seem like an overwhelming project: getting or keeping your financial house in order.
By focusing on just a few tasks at a time, a seemingly impossible battle can be won. Choose one or more of the following things to get done this month.
Review last year’s spending
January is a great time to review spending trends over the entire previous year. Start by organizing your money outflow into big categories: Lifestyle, Giving, Debt, Taxes, and Savings. For those working, use pay stubs to make sure you capture dollars that go to taxes or savings plan without ever hitting your bank. If you use a tracking tool like Mint.com or Mvelopes.com, it should be easy to total your giving and debt payments (like mortgage and auto loans). Now, using your spending review, think ahead to this year. Is last year’s spending amount what you’d like to see again this year? Are the percentages in line with your values or future goals?
If you didn’t track spending last year, there’s no better time to get started. Plug your accounts into one of the online tools mentioned above to start getting a good picture of your spending.
Create a debt payment plan
For those with debt (including mortgages), is this debt weighing you down? January is a great time to build a payment plan. Avoiding the use of debt is one of Sound Stewardship’s core principles, because staying debt-free brings financial freedom and flexibility. Start by asking yourself, “At what date would I love to be completely debt free?” What could you do this year to move toward that goal? If you’re facing multiple debts, a debt snowball or debt stacking can help you prioritize payments.
Revisit retirement plan contributions
January is a great time to review how much you’re setting aside for retirement. At minimum, most individuals should try to take advantage of whatever match an employer offers. This match limit, however, is often not enough to create the type of retirement balances that may be needed by future retirees. Consider other options to save for retirement over time.< Back to Updates