New year, new financial game plan. Renew your financial knowledge with fast facts of three financial topics that’ll set you up for a successful 2016, courtesy of Putnam Bank.
Creating a Monthly Budget: How-To
- Categorize your expenses: Break up what you spend into relative categories, such as housing, food, auto, and personal. Then distinguish your essential spending from extras, notating the things you can’t live without and the one or two extras that add meaning to your life.
- Identify what’s earned, and calculate your spending: You can’t budget if you don’t know what your cash flow is. Nail down exactly what you bring in each month with income after taxes and other side sources of cash flow. Subtract that value from it an estimate of what you typically spend in 30 days. This allows you to see if you’re saving, breaking even, or coming up negative.
- Know where you’re going: If you have nothing you’re working towards, what’s the point of a budget? Pick a goal – paying off debt, buying a car – and rework your numbers from steps 1 & 2 to create a way to achieve it.
Understanding the Top 3 Bank Account Options
- Savings: Use this account to save money first and foremost. Checks are not typically used with savings as their primary function is accumulating funds and interest. Putting a little each month into your savings will ensure a steady value for years to come.
- Basic Checking: Draw money for checks from this account. Typically a checking account acts as the primary account for a person or family. Checking is what is most often associated with paying bills and monthly expenses.
- Certificates of Deposit (CDs): Also called time deposits due to the holder’s agreement to keep money in the account for a specified time (three months, six years, etc.). Money deposited in this can’t be touched during that specified time, but it typically yields a higher rate of interest.
Launching a Retirement Plan
- Know your needs: Your current age, expected age of retirement, amount currently in savings, and other factors are needed to determine how much you need to set aside. Check out our handy retirement calculator for a rough estimate.
- Check your employer’s plan: If your employer offers a 401(k) or similar plan, hop on it. Lowered taxes, matched contributions, and automatic monthly deductions make savings a breeze.
- Start saving ASAP: Compound interest is a beautiful thing. Saving smaller for a longer length of time often yields more benefits than if you start saving big late in the game.
If you’d like to strategize a game plan for your financial future, our financial advisors are here to help! Call Putnam Bank to get started today!
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