Why is it wise to revisit New Year’s savings goals now?

Why is it wise to revisit New Year's savings goals now?

Remember when you resolved in January to spend less and save more in 2023? Financial advisors say summer might be a good time to revisit those goals. Think of it as “the new year in July”.

A quick financial review now makes sense because there’s still time to make adjustments if you’re falling behind on your goals — whether it’s building an emergency fund, cutting credit card debt or resuming student loan payments now that the pandemic pause is finally (really!) coming to an end.

Many events that drive spending, such as back-to-school (supplies and clothing), Halloween (costumes and candy), Thanksgiving (food) and the winter holidays (gifts), are just around the corner. “So it’s a really good time to prepare for year-end spending,” said Yanelli Espinal, author of the book “Mind Your Money.”

Nate Hoskin, a certified financial planner in Denver who focuses on young adults, recommends a personal “audit.” If it sounds like something the Internal Revenue Service would do, think of it as a financial health “check”.

Mr. Hoskin, who has a substantial property TIC Toc Next, it’s urged to rigorously evaluate the goals you set at the beginning of the year. Let’s say you set a goal of saving $500 per month but you only save $200 per month. “Be really critical and ask yourself, ‘Why haven’t I reached this goal?'” he said.

Did you make more money than you anticipated? (An extra effort may not be as profitable as anticipated.) Or did you often go out to dinner? Inflation may have raised your cost, but it is now coming down.

Mr. Hoskin recommends printing out bank and credit card statements and using a highlighter to mark “trivial” items, which represent money you don’t need to spend.

To get back on track, work your way up to your goal slowly. Mr. Hoskin said, if you’re able to save $200 a month, that’s great. Try saving $250 next month, then aim for $300. “Try to reach $500 a month by the end of the year,” he said.

If your plan was vaguely to save any money left over at the end of the month—but never seem to have any extra saved—try the “save first” strategy. Automatically transfer 15 percent of your pay to a savings account (your bank, your employer, or various money apps can help arrange this), and then create a spending plan for the rest of the money.

“Changing it can help you a lot,” Mr. Hoskin said.

Ms. Espinal said you can try to make saving a habit and try to transfer money weekly or daily toward your goal.

Jesse Mecham, founder of the You Need a Budget app, recommends that you — and your partner, if you’re part of a couple — first make a list of what you want from your money. Pay for holidays abroad? Build an Emergency Fund?

Then, he suggested, look at your account statement and scroll through the last few months’ transactions, perhaps taking 20 minutes at most. Many banks and credit cards automatically categorize purchases, giving you an idea of ​​where your money is going. Make note of any expenses that advance your priorities, but don’t beat yourself up for purchases that didn’t.

“Nobody’s perfect,” he said.

With that knowledge, Mr. Mecham said, set goals for the cash in your bank account by asking, “What do I want to do with this money until I get paid again?” You can use a budgeting app or a basic spreadsheet to plan.

If you know both your available cash and your goals, you can better manage the trade-offs, Mr. Mecham said. Instead of thinking, “I can’t spend money on it,” you might say to yourself, “I will rather Spend money on it.”

Paying off credit card debt this summer is especially timely card balance And Average Card Interest Rates are high. Free, Online Debt Payoff Tool calculator.net This can help you see how much extra you can afford to pay and how long it will take to clear the balance, Ms Aspinal said.

Don’t get bogged down in whether to use the “avalanche” method — prioritizing paying off the debt with the highest interest rate — or the “snowball” method, which focuses on paying off the smallest balance first to create a sense of success.

“Most people should use a hybrid approach,” Ms Aspinal said. Start by paying a small balance to gain confidence. Then start making payments on the higher-interest rate cards (put money on the highest rate and pay the minimum on the other cards until the first card is paid off) to save as much money as possible.

Pick a specific date for your checkup to make sure it happens before the end of summer, says Rob Williams, managing director of financial planning at Charles Schwab. “Putting it on the calendar can help you get financially healthy,” he said.

Here are some questions and answers about how to do a summer financial checkup:

Summer is a great time to review withholding — the amount of tax withheld from your pay — especially if you’ve had a pay raise or a major life change, like getting married or having a baby. If you withheld a very low tax bill, your tax bill could be unexpectedly large next April. IRS offers a online estimator Where you can answer a few questions to see whether you should modify your withheld amount or not. To make changes, file an update Form W-4 with your employer.

Checking your credit report, which lists your borrowing history, is a smart move and can usually be done online relatively quickly. The three major credit reporting bureaus — Equifax, Experian and TransUnion — are offering weekly free reports through at least the end of this year. www.annualcreditreport.com, If you notice an error, contact both the credit bureau and the lender who provided the incorrect information. federal trade commission They say.

Many states offer summer sales tax “holidays”—days or weeks when state sales tax is waived for the purchase of certain items, such as clothing or back-to-school supplies. new JerseyFor example, one that has scheduled its event from August 26 to September 4 includes a tax exemption on computers priced under $3,000. Some tax experts dismiss the phenomenon as a political gimmick, but they remain popular with buyers. The Association of Tax Administrators makes a proposal State-by-State List on its website.

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