New Year’s resolution: Fatten your bank account
Once the clock strikes midnight on New Year’s Eve, millions will make a resolution. While some may focus on fitness or trying new hobbies, many Americans are turning to their bank accounts.
Results from a study by the National Endowment for Financial Education, 8 of 10 Americans will set a financial New Year’s resolution for 2019, a 10 percent increase from last year’s survey.
“Over the past year, despite uncertainty and volatility surrounding the stock market, rising interest rates, as well as concern of an economic slowdown, we are seeing incredible determination from Americans who want to take control of their finances and improve their financial well-being in 2019,” Billy Hensley, president and CEO of the foundation, said in a statement.
The study found that while Americans understand the importance of saving, they often stress over their ability to do so, with more than half saying saving money was their biggest cause of financial stress.
Brady McArdle, an owner and certified financial planner of Galecki Financial Management in Fort Wayne, said the first step for those making financial resolutions is to sit down and take a look at their financial situation.
From there, McArdle said it becomes easier to form a financial plan and reach goals.
“Ideally, it’s really just keeping yourself accountable, and you have to do that by reviewing the plan often,” McArdle said. “Every six months or a year, just sit down, take a look.”
At 3Rivers Federal Credit Union, more than half of its members have a checking and savings account, making it easier to commit to saving, said Melissa Shaw, marketing director.
“When it is already divided for you when you are paid, it makes having the discipline to commit to your savings more manageable,” Shaw said. “In fact, many members have multiple savings accounts, which they have deposits designated for specific expenditures.”
To stick to a budget, Shaw recommends creating a range of goals, which could be anywhere from boosting your credit score to owning your first home.
“When you keep both the short and long term in mind, seeing the big picture is much easier and helps take the stress out of financial planning,” Shaw said.
Another way to eliminate financial stress is to have an emergency savings account.
According to the study, 68 percent of Americans said they experienced an unexpected financial setback in 2018. Some of the most taxing setbacks on the list were transportation issues, medical care bills and inability to keep up with debt.
“At some point, we’re going to go back to a recession, and unfortunately when that happens, they’ll lose jobs,” McArdle said. “If you don’t have an emergency cash savings to have six months worth of expenses, then that becomes really difficult.”
Both Galecki Financial Management and 3Rivers Federal Credit Union recommend financial guidance, whether it be through an institution or trusted partner.
McArdle uses the example of an athletic trainer, where if there is someone there to coach alongside someone, they’ll work harder.
“You’ve got to have someone working with you to make sure you’re doing all the right things that you need to do, and to make sure you’re being held accountable for your actions to put the plan in motion,” McArdle said.