Thinking about how you can rock your 2016 goals — from shedding those last holiday pounds to finally getting a promotion at work? As you’re planning, be sure to consider your financial goals, too! After all, why not get healthy and wealthy in 2016? Here are the top 10 financial goals to set this year:
Budgets can get a bad rap, but it’s merely a spending plan that can help you spend less than you earn. It’s a way to stop wondering where your money went, and start thinking about where it will go.
Start categorizing your spending. For instance, you could create budget categories for food, rent, going out with friends, Netflix and so on. Next, look at your income and expenses. Using your after-tax income, allot a certain amount of money to different categories in your budget. Strive for spending 30 percent or less of your income on housing, and live within your means.
Tip: Consider using tools like Mint or BMO Harris Total Look®2 (if you use BMO Harris Online Banking®1) to track your income and expenses. Want to DIY? You can use an Excel spreadsheet or even a pen and paper.
You and debt have probably never really hit it off. Make a clean break by creating a payoff plan to get rid of that financial ball and chain. First, make a list of all your loans and take note of each balance’s interest rate. Next, focus your efforts on paying the high interest debt first, so you’ll end up paying less total interest over time. Keep yourself motivated by coming up with some milestone rewards (such as treating yourself to a fancy dessert after you’ve paid down your first 10k).
You may not have invested in wrinkle cream or colored your hair yet, but it’s never too early to start planning for old age. Why? Because you have one secret agent to jump-start your retirement: Time. The magic of compound interest can turn just a little bit of savings into a large nest egg. To rock this goal, strive for saving 10 to 15 percent for retirement through your employer-sponsored 401(k). If you’re eligible, make sure you contribute enough to get a company match, at least! It’s free money and a sweet job perk. In addition, consider getting extra tax benefits by contributing to a Traditional or Roth IRA.
Tip: Saving now can mean turning a small amount into a large nest egg later. In 2016, you can contribute up to $18,000 in a 401(k) and a total of $5,500 in an Individual Retirement Plan (IRA). Just be aware of potential income restrictions and contribution limits3.
Haven’t given serious thought to saving yet? You’re not alone. According to the Rainy Day Study released in May, 29 percent of respondents say their savings would last a month or less. Unexpected things happen to all of us, and establishing an emergency fund can help ease the pain of hard times.
Tip: Safeguard your finances and save three to six months’ worth of expenses in a high-yield savings account.
Dreaming of an Italian getaway? An adventure-filled trek through Thailand? Or maybe you want to upgrade your car or start your own business? In 2016, don’t forget to save money for your personal goals. After all, money is a tool to help you enjoy life. Saving for your goals can help you spend money on what actually matters to you and avoid debt while pursuing your dreams.
Want to know one of the best things to invest in? Yourself. Yep, that’s right: You. By investing in yourself, you may see returns on your happiness, success and even salary. Think about what new skills could beef up your resumé, and look for learning opportunities in your community or online that could help you move your career forward.
Not only that, think about what you want to accomplish. Do you want to pursue an MBA? Spruce up your design skills or master the art of coding? Become a better writer? Look into resources and classes at General Assembly, Coursera, Udemy and more. By investing in yourself, you can get a leg up in your career and become more well-rounded.
Knowledge is power. In 2016, commit to educating yourself about money and personal finance. Learn about the many options available to you when it comes to saving for the future — novice savers can become savvy wealth-builders with just a bit of training. Consider curling up with a book to start learning more about personal finance; get started with this list of 25 books from The Wall Street Journal. Your future self and your nest egg will thank you.
Bigger is better when it comes to your savings account. But let’s face it, saving can seem hard. If you’ve ever felt like “I can’t afford to save” or “I’ll start saving next month,” we have the perfect remedy for you: Automate your savings.
By setting up automatic withdrawals from your checking account to your savings, you can put your savings strategy on auto-pilot and you’ll hardly even notice the money is gone. Start by automatically saving 10 percent of your income with each paycheck. You can typically set up automatic transfers online or by talking to your bank. Automating your savings can make the process easier and help you build wealth effortlessly.
What if you made an extra 25 percent in 2016? How would that change your financial life? Would it allow you to pay off debt or jump-start your retirement fund? Or how about reach some of those personal goals? Make it a goal to earn more money in 2016. You can do this in a variety of ways:
Budgeting and saving are important parts of being financially responsible — but you can also focus on earning more to help you reach your financial goals.
Still not sure where to start on your 2016 financial strategy? Consider sitting down with a financial advisor. By taking a look at your entire financial situation, they can help you establish a customized plan designed to meet your short- and longer-term goals. Then, your financial advisor can help you select suitable products and services designed to put your plan into action. (Our friends over at BMO Harris Financial Advisors may be able to help.)
In 2016, commit to making your finances a priority and set financial goals for yourself. You got this!
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2 BMO Harris Total Look Mobile is available for select BMO Harris Mobile Banking Apps.
3 BMO Harris Bank and its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors.
Securities, investment advisory services and insurance products are offered through BMO Harris Financial Advisors, Inc. Member FINRA/SIPC. SEC-registered investment adviser. BMO Harris Financial Advisors, Inc. and BMO Harris Bank N.A. are affiliated companies. Securities and insurance products offered are: NOT FDIC INSURED – NOT BANK GUARANTEED – NOT A DEPOSIT – MAY LOSE VALUE.