Start the new year on right financial foot
Metro Creative
Experts say the key to a successful financial year is setting goals to monitor and manage debt, find savings options and maintain good spending habits all year long.
Metro Creative
Experts say the key to a successful financial year is setting goals to monitor and manage debt, find savings options and maintain good spending habits all year long.
Metro Creative
Experts say the key to a successful financial year is setting goals to monitor and manage debt, find savings options and maintain good spending habits all year long.
Having wrapped up their holiday spending, many residents plan to start the new year on the right financial foot, and one Belle Vernon accountant said the best way to achieve that goal is by monitoring debt and seeking savings options.
Certified public accountant Edward Mendola of Belle Vernon said while not all debt is bad, learning to manage it is crucial.
A study by Fidelity Investments found that 37 percent of Americans are considering to make a financial resolution this year, up from 31 percent in 2015. The goal to save more topped the list at 55 percent while 20 percent are looking to spend less and 17 percent to pay off debt.
“The successful individuals and businesses are the ones that manage their debt very well,” said Mendola. “Debt is not necessarily a bad thing — a mortgage is good, a car loan is good — but too much debt is the worst thing in the world.”
For optimal financial planning, Mendola said, people should seek to understand retirement plans offered by their employers that can benefit them in the long run.
“Invest in a pension. Get the best out of it,” Mendola said. “Be aware. Are you aware of how much you can contribute and how much your employer can match?”
Setting aside money will ensure financial stability later in life, said Mendola, and also forego taxation on income contributed to the pension fund, allowing those people to keep more of their hard earned money.
“Many people don’t realize a pension contribution is twofold. You’re writing a check out to yourself, and you’re getting a tax deduction for it,” said Mendola.
According to Fidelity’s study, most of those who made financial resolutions last year are in better financial shape today.
“The biggest thing is making sure to set a budget and stick within that budget for the next year so you don’t find yourself within a cycle,” said Bryan Kisiel, certified public accountant at Kisiel and Associates in Connellsville.
Kisiel said the best way for consumers to pay back debt such as credit card expenses is to shop around for lower interest rates.
The National Retail Federation’s 2015 Holiday Consumer Spending Survey found consumers celebrating Christmas, Hanukkah and/or Kwanzaa planned to spend an average of $802 on food items, decorations, gifts and more over the holiday season.
Kisiel suggests to start planning now for next year’s holiday and to have a realistic budget. “Factor in repayment of last year and how you’re going to fund next year so you’re not in the crunch again of binge spending,” he said.
Victor Fiano of Uniontown, a certified financial planner at Wells Fargo Advisors, stressed the importance of maintaining good spending habits.
For starters, Fiano suggests using a systematic savings program by setting aside a certain percent from each paycheck.
He said having a pension plan at work or an IRA is equally important for retirement purposes along with having a life insurance policy.
“One simple thing to remember is that you need to cover yourself if you become disabled or die too soon,” said Fiano.
The Fidelity study reported that 56 percent of consumers cited the most popular long term goals as saving for retirement in an IRA or workplace savings plan with 35 percent saving for retiree healthcare costs and 27 percent saving for college.
For short term goals 52 percent said they plan to place the money in an emergency fund, 39 percent save for a vehicle, 38 percent pay down credit card debt and 35 percent save for a home or big ticket household item.
As the new year rolls around, consumers will be looking to achieve sound financial futures by protecting their wealth, assets and savings, based on the latest results from Lincoln Financial Group’s “Measuring Optimism, Outlook and Direction (M.O.O.D.) of America Survey.”
According to results, 88 percent of Americans agree that they always try to budget and make sure that they have money set aside to spend on family, particularly during special occasions like the holidays.
Dr. Audrey Guskey, marketing professor at Duquesne University, advises not to overspend during the holidays by getting caught up in the moment.
“Once you’re in debt the whole financial picture gets stressful,” said Guskey.
She said one way to cut back on expenses is to look at your cable or cell phone plan to see if there is smaller packages.
Also, if you have credit card debt make more than the minimum monthly payment or pay it off as soon as possible to avoid being charged interest.
Guskey said the same goes for a mortgage. “A lot of people don’t realize if you pay it off or pay extra on it it goes to the principal and not the interest.”
Most importantly, the survey revealed that 95 percent of people believe it is important to stay within a budget throughout the year.
To avoid overspending, Kisiel advises clients to take advantage of credit union Christmas clubs or to set aside some money each week. “My biggest recommendation is to sit down and have a plan on how to repay and to look at your budget to see how much you can pay down each month,” he said.
The survey also found 92 percent want to make sure they can live the lifestyle they want in retirement while 86 percent cited the importance of paying off credit card bills in full each month.
“With the economy being so tight, people are concerned about job security and their future,” said Guskey.