Making the right resolutions can make all the difference when it comes to improving your financial health. Michigan State Federal Credit Union's Chief Marketing Officer Deidre Davis shared three financial New Year’s resolutions to help you start 2021 off right.
A good first resolution is to make this the year you establish and stick to a budget. To use your money wisely, creating a budget is important. This makes it much easier to track how much you are spending each month. You can use this process to help you identify where you can reduce costs and then set reachable goals. One way you can budget is using the 50-20-30 method: spend 50% on necessities, save 20% (including debt payments), and the remaining 30% goes to wants.
The next resolution is to pay off debt.
If your credit is good, consider consolidating credit card debt to a lower interest rate loan or refinancing your car or home loan. This could save you hundreds of dollars over the term of the loan. You can also avalanche your debt by paying extra toward the credit card with the highest interest rate. Then, once it’s paid off, pay more toward the next highest, and so on until your debt is gone.
The third resolution would be to start and add to your emergency fund.
According to bankrate dot com, nearly four in 10 adults would need to borrow money to cover a $1,000 emergency. Having savings set aside helps you cover costs you don’t budget for, like car repairs or medical costs. Experts recommend having three to six months of living expenses saved. Starting with a goal to save each month is a good way to begin. To make it easier, set up automatic transfers of your goal amount; maybe you move $25 each payday from your checking to an emergency fund. This money is for emergencies only, so it’s important you don’t touch it unless you absolutely have to. A robust emergency fund can protect you against unexpected expenses, and it helps you from accumulating more debt.
What can MSUFCU do to help?
MSUFCU has a variety of products and services to help you manage your finances. Knowledgeable employees can help you with your budget and discuss whether a debt consolidation or loan refinance makes sense for your current financial situation.
To assist in starting an emergency fund, their Savings Builder℠ account helps you establish savings faster by paying you higher dividends on your initial contributions. This is different from traditional savings accounts that require you to deposit more to earn the higher rate.
To learn more, visit msufcu.org