LOUISVILLE, Ky. (WAVE) - A new year is a perfect time to toss out old habits and start anew.
It’s also a perfect time to reshape and reconfigure your financial future as well.
Last year reminded us of some hard lessons we already knew but maybe didn’t take as seriously as we should have. Now more than ever we know it’s time to end any bad financial behavior and set ourselves up for economic achievement in 2021.
“Self-discipline is the hardest thing when it comes to money management,” best-selling author and financial guru Rachel Richards said. “Knowledge is nothing without execution.”
It may be an understatement to say 2020 was a tough year for many, especially financially. As a new year begins, the most popular resolution usually involves physical fitness, but the pandemic has made it clear that financial fitness is just as important. Hundreds of thousands of people have lost jobs, and the ability to meet their basic, everyday needs is becoming increasingly difficult.
“No. 1, pay off high-interest debt,” Richards said. “If you’re paying 15 percent on a car loan, or 20 percent on a credit card, you’re going to get the most bang for your buck by paying off that debt.”
According to a new survey by Bankrate, Americans’ top financial regret in 2020 was not having enough emergency savings to withstand a crisis.
“Cash is king,” Richards said. “It’s important to have that emergency fund stocked with three to six months of living expenses.”
It may take a bit of time to build that emergency fund, but stash away what you can when you can. After paying off high-interest debt, and beginning an emergency fund, you may want to turn your attention to a retirement fund. According to Investopedia, a website that provides investing and finance education, almost half of all Americans have no retirement savings whatsoever. Richards said time in the market is more important than timing the market.
“Get invested,” stresses Richards. “It’s better to just get invested now and know that the more time you spend in the market overall without touching your investment, the better you are.”
If you think you may need a little help, look for a financial adviser and pay attention to how they’re paid. Family, friends and colleagues may be a good place to start your search.
“If a financial adviser is commissioned based, they are going to be paid based on selling you certain products and those products might not always be in your best interest,” Richards said.
Finding the best financial advisor for your situation takes time and research. Never rush into hiring someone until you take the time to look at what may be best for you and your finances. Some are paid a flat fee or a percentage of what you make in the market.
”If that person is able to grow your money or grow your portfolio, they’re gonna get paid more money,” Richards said. To keep more money in your pocket, Richards believes everyone should learn to negotiate in 2021.
“Call and negotiate fees and rates on things,” she said. The most common bills you may be able to lower, with a little diplomacy and discussion, include healthcare, cable, internet, gym memberships, credit card fees and interest, and cellphone service.
”It doesn’t hurt to ask,” Richards said. “The worst they can say is no.”
Start securing your financial fitness today by looking at the bills you know you have each month. Then look at what you know you have coming in to pay those bills each month. It all starts with a budget and a little discipline.