Spring is a time for clearing out the clutter and making room for growth – even in our financial lives! April is recognized as Financial Literacy Month, a month when improving financial education is promoted as a national priority. Financial wellness support is a year-round commitment from OneWest Bank to our customers, and we're always here to offer help. Consider how implementing some of the following habits could help improve your personal finance strategy. These can serve as new ideas or a gentle reminder to put renewed effort into financial management.
Allocate, allocate and allocate
Planning is a great first step for taking charge of your finances, and deciding where to allocate your income is one of the fundamental elements of financial planning. You may want to first contribute your income to tax-deductible expenses such as health insurance or retirement savings. You can then allot the rest to your core expenses, like housing, transportation, utilities, education, and groceries. Next, consider regularly allocating money to emergency funds for rainy days and then putting money aside for longer-term and larger goals like a wedding, buying a home, or taking a vacation. There are many different account options to consider for these kinds of funds including certificates of deposit (CDs), which hold your cash for a fixed amount of time in return for a higher interest rate.
Review your subscriptions
Examine the various services you subscribe to and think about how often you use or how much you enjoy each service. Cutting down on some of your expenses could help free up additional cash for other uses, so consider whether there are services you are not fully utilizing. For example, are you using all the data of the cell phone plan you subscribe to? How often are you taking advantage of your cable package? Are you regularly making use of your gym membership, or are there exercises you could accomplish at home instead? Taking time to conduct this simple analysis may provide you with some additional funds that you can put toward a savings goal.
Create a debt management plan
Putting a debt management plan in place can help you proactively manage any debt you've already accumulated or be prepared in the event that you fall into debt in the future. A typical debt management strategy might include tackling debts with the highest interest rates first because those will be the most costly. Your individual financial circumstance will determine how you should order payment of your debts, which could include a credit card, personal loan, student loan, car loan or housing debt. To prevent the opportunity to accumulate debt moving forward, one option is to create a spreadsheet for tracking your monthly expenses and payments. You can include when each bill is due, how much you paid, and what is left over from your monthly income. This system can help you identify a surplus or deficit in your funds each month and better forecast your cash flow for the months ahead.
Take the credit and deductions you deserve
If you aren't keeping accurate records of all your financials, it's possible that you aren't taking full advantage of your allowable tax deductions and credits. To preserve your sanity at tax season, set up a process for keeping financial records and follow it throughout the year. Be sure to consult the IRS website1 when organizing your documents – there could be some deductions and credits you're qualified for that you aren't aware of! Taking these allowances can save you a portion of the amount of tax you owe, leaving you with extra cash to put aside for savings.
Did you miss our February financial tips on retirement planning? Check out our recent retirement savings articles with targeted tips for millennials, Gen Xers, and baby boomers. Keep an eye out for more educational articles to come, or visit your local OneWest Bank branch to talk with your banker about how our products and services apply to your specific finance situation.
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