It’s a new year and the perfect time to map your financial future

Couple reviewing their financials with guidance from an expert

By following a few simple steps you can achieve greater financial freedom.

If you’ve ever traveled to a new location without a map (or without your trusted mapping app on your mobile phone) you know how confusing reaching your destination can be. Becoming financially self-sufficient also requires an accurate “map,” and the discipline to attentively follow it safely to your destination.

The key is taking control of your money instead of it controlling you. Your income doesn’t necessarily determine how financially successful you are – your choices and priorities do. If you’re struggling, financial success may seem like a distant dream. However, by following a few simple steps, you can put yourself back in the driver’s seat.

Step 1: Establish Goals

Identifying clear, achievable goals is a crucial part of anyone’s financial plan. Making precise goals helps you determine how much you need to set aside each month, and helps you track your progress. Make sure your goals do not overwhelm you. Start with a few reasonable goals and build on your successes.

If you share your finances with someone else, discuss and set priorities together. Getting each other’s “buy-in” will mean more commitment to reaching the goals you’ve set together. And maybe create a little more harmony in your home!

Step 2: Build (and Follow) a Budget

Making more thoughtful spending decisions, rather than buying on impulse, can help you achieve the goals you’ve set. Most of us struggle with the “wants versus needs” quandary.

To sort it all out, convert your goals to a budget. Write down all your sources of income. Then evaluate your expenses. Most of us have “fixed” expenses (housing costs, car or other loan payments, utilities, health insurance). However, even some fixed expenses can be adjusted to meet your long-term goals. For instance, is the rent on your waterfront condominium really as important as your goal to retire early? Will having high-definition cable boxes in every room (and the fixed utility bill) mean giving up some financial security tomorrow?

What sinks most budgets, however, is how we spend what’s left over. We get into trouble with unplanned spending at the store or as we pass our favorite restaurant. Take a list of your “needs” to the store. Only buy what’s on the list. Give yourself a dining-out allowance each month, and stick to it. Budgeting doesn’t have to feel like you’re serving time in jail. However, identifying and reducing expenses that are not needs can help you reach your goals or pay off debt more rapidly. And that’s real freedom.

Step 3: Work on That Debt

Speaking of debt, taking on debt for major expenses like the purchase of a home is generally considered a wise financial decision that can have positive financial payoffs later. And while saving for a car is best, an auto loan that allows you to get to a new job (and earn an income now) is another example of when debt may yield a greater benefit.

Credit card debt over the long term is generally considered undesirable, especially at the high rates found on many traditional retail and bankcards today. There are options. TwinStar offers some of the most favorable loan rates in the market to help our members reduce expenses and pay off debt as quickly as possible. We are able to do this because we are a member-owned, member-focused credit union.

Step 4: Save – Even a Little – Starting Today

If you’re young, it may seem like you’ve got forever to save. But the sooner you start saving, the less catch-up you’ll have to do when you get older. Giving up a daily latte could put over $100 into your savings account every month. Saving is easier if you make it an automatic process. With direct deposit, you can have a portion of your paycheck deposited into your savings account. Additionally, TwinStar can set up a periodic automatic transfer of funds from your checking to your savings account.

Visit TwinStarCU.com/resources for helpful tools and tips. It’s a new year, and a great time to take your next steps toward a bright financial future.