Gotta Start Somewhere
Much like my New Years Resolution to start saying “yes” to more activities (more on that later…) – everyone’s got to start somewhere. Why not use the energy of the new year to get started on your financial journey? While no two people are the same and everyone is going to have a different financial plan, there are general starting points that almost everyone can use:
- Monitor your cash flow (what you are actually spending and bringing in) and create a realistic and achievable budget (I love Mint or You Need A Budget). Cash flow is one of the most important pieces of your financial life and one that is often overlooked. It doesn’t matter how much money you are bringing in, if you are spending it all every month. While you need to “enjoy the journey” it is also important to be mindful of your future needs.
- Establish $1,000 in savings.
- Pay off any high interest (credit cards, etc.) debt and continue to pay the balance off in full every month. If you are carrying a large balance and paying it off in full isn’t possible start with the avalanche method.
- Start investing towards your future:
- If your work offers any retirement accounts (401k, 403b, SIMPLE IRA) make sure you are contributing enough to meet their match. Don’t leave any “free money” on the table.
- Try to increase the amount you contribute towards retirement by 1% a year and/or as your salary increases. Many employer plans already have this as a feature, but it doesn’t hurt to double check yours.
- Consider opening a Roth IRA to invest with tax free growth.
- Bring your emergency savings up to 3-6 months worth of your salary. We recommend at least 3 months for families with two, consistent sources of income and at least 6 months for individuals or families with one main source of income. If you are self-employed, consider having 12 months of living expenses in savings.
- Protect yourself and your loved ones with insurance.
- Ensure that your auto policy & homeowners/renters has appropriate limits. This is going to vary depending on where you live. If you are in Northern Virginia these limits should be higher than if you are in the Midwest.
- Consider life insurance through work and/or purchasing a 20-year term policy. Many employers offer group life insurance as part of your benefits. It is often more cost effective if needing more coverage to increase your benefit through your employer provided group life insurance first before purchasing your own policy.
Kira, Tyler, Tom, friends, and myself started off the new year at a Commanders game. While none of us are huge fans (I was representing the Minnesota Vikings) it was a fun way to kick off 2023!
