Get the Most Out of Your Budget

If you made New Year’s resolutions, there’s a good chance one of them has to do with finances or organization. According to About.com, “getting out of debt” and “getting organized” are the seventh and tenth most popular resolutions, respectively.

This article addresses valuable financial tips that will benefit most budgets, whether you’re in debt or not. In doing so, you’ll be able to get better control of your finances by implementing organization into your budget. Consider it a two-for-one.

Assess and Refine Your Budget

This may not seem like new advice, but even if you already have a working budget, it’s worthwhile to look at it with fresh eyes as the year begins. Ask yourself the following questions:

Does my budget support my financial goals?
Take time to write down your financial goals and then build monthly allocations into your budget. While vacations and significant purchases may be on your list, make sure you also establish goals for retirement.

Are my tax needs factored into my budget?
Nobody likes getting a tax bill at the end of the year, but a large refund isn’t necessarily a better alternative. It may feel nice to get a sudden influx of money, but that is money you could be earning interest on as you set it aside to reach your goals faster. Try to find a balance between the two and minimize your refund.

Is my budget written down?
You can do this with apps, spreadsheets, or pen and paper. It doesn’t have to be sophisticated. Just make sure to designate a category for every dollar earned and spent. Don't forget to include expenses such as car tags, oil changes, property taxes, and even Christmas gifts. Make sure no expense is overlooked.

Do I live by my budget?
A budget should be firm enough to keep you on track toward your goals but flexible enough to allow for unexpected expenses. If you get off track, it’s important to get back to the budget right away. Getting off track is a learning opportunity. Use it to assess your budget and see where you might be able to cut back in order to save money for any future, unforeseen events.

Save Smart

This year, don’t just save more, save smart. The point of saving money is to reach financial goals faster. One very easy way to save smart is to put your money where you'll earn a higher interest rate than what you'll typically find with a standard savings account at a bank or credit union. These include money market accounts and certificates of deposit (CDs), which may offer rates several percentage points above a regular savings account.

Contrary to what many think, you don’t have to have a lot of money to start. For example, AG Loan Fund Investment Certificates, begin with a minimum investment of $250.

You can take your investments a step further by setting up a laddering strategy. This approach staggers your investments so they mature at different times. Doing so enables you to take advantage of higher interest rates while maintaining regular accessibility to your funds. This strategy also lets you achieve more consistent earnings in spite of fluctuating interest rates.

Plan for Retirement

Open a Retirement Account.
If you have access to an employer account, such as a 401(k) or 403(b), set one up. Alternatively, you can contribute to an Individual Retirement Arrangement (IRA). There are several different types including Traditional, Roth, and Simplified Employee Pension (SEP), which is a great option for the self-employed. 

Make regular contributions
Get an idea of how much you’ll need to save with these easy retirement calculators. Make budget allocations accordingly. The most painless way to save for retirement is to have contributions automatically deducted from your income. You may be pleasantly surprised and find that you don't even miss that money. 

Increase your contributions over time.
It’s absolutely okay to start small, but make it your goal to increase the amount little by little. If your employer offers matching contributions, try to build up your amount until you’re taking full advantage of this benefit.

Article originally posted here on the AG Financial Solutions website.