New Year’s Resolutions-Personal Financial Planning and Budgeting

Mike Flynn, Senior Vice President

Ringing in the New Year most certainly brings with it the setting of “New Year’s Resolutions”. Merriam- Webster’s Dictionary defines this word “resolution” as… “The act of analyzing a complex notion into simpler ones…”, or “something that is resolved, the firmness of resolve”. There are several synonyms of this word, and for our purposes we will use “determination”

With the coming of the New Year, many individuals resolve or become determined to change a variety of things in their lives. The most popular resolutions, as well as those most broken, may sound familiar. A recent informal poll of several employees in our main office lobby revealed the following goals for 2020: Lose weight. Quit smoking. Learn something new. Eat healthier. Travel more. Do more for others. Expand personal comfort zones. Go to church. Budget and save money. The last one is often near and dear to Bankers as it has an effect on many things in the lives of our customers.

The American Bankers Association recommends the following 6 tips to help consumers organize their finances:

Review your budget. A lot can change in a year. If you’ve been promoted, had a child, or become a new homeowner or renter, be sure to update your budget. Determine what expenses demand the most money and identify areas where you can realistically cut back. Develop a strategy for spending and saving – and stick to it.

Evaluate and pay down debt. Take a look at how much you owe and what you are paying in interest. Begin paying off existing debt, whether that’s by chipping away at loans with the highest interest rates or eliminating smaller debt first.

Set up automatic bill pay. By paying recurring bills automatically on the same day each month, you’ll never have to worry about a missed payment impacting your credit score. Plan out your automatic payments to ensure your checking account has an adequate amount of funds when the payments are scheduled to be withdrawn.

Save for emergencies. About 40 percent of Americans are positioned to cover a $400 emergency expense. You can prepare by opening or adding to a Bank of Lexington savings account that serves as an “emergency fund.” Ideally, it should hold about three to six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.

Go digital. Converting to paperless billing will help keep your house—physical and financial—more clean and organized, and will help protect you from fraud. Utilize your bank’s mobile app and on-line banking platform to check your balance, pay your bills, transfer funds, deposit a check and send money to friends from wherever you are.

Check your credit report. Every year, you are guaranteed one free credit report from each of the three credit bureaus. Take advantage of these free reports and check them for any possible errors. Mistakes can drag down your score and prevent you from getting a loan, or cause you to pay a higher than necessary interest rate.

Sounds simple right? It is if you resolve to implement the plan, stick to the plan, and then reap the plans rewards. There’s an old saying that it takes 21 days to establish a habit. Personally I think it takes a few more days than 21 but certainly within a few months you will begin to see the difference in your finances. Another old saying-if it is worth doing, it is worth tracking. Write your goals down, where you start, where you are going, and track progress along the way-in writing. After you establish your habits, your savings will have grown, your obligations will be less, and you will be financially healthier and happier.

Need help? Any of our officers will be glad to assist you in not only setting your goals and implementing a plan, but also sharing the products and services Bank of Lexington provides that will assist you in achievement of your goals. Stop in and see us if you need help implementing your resolutions for the New Year.