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Financial Health and Well-Being for the New Year

December 18, 2008

By: Jim Oosterman
Melrose Bank

Have you thought about your New Year’s Resolutions yet? Consider setting some financial goals. The best way to approach New Year financial goals without getting overwhelmed is to establish small realistic steps which will set you on the course to achieve larger goals. While planning your goals, you should re-evaluate all factors that attribute to the overall state of your current financial health. Taking the time to review the positives and negatives of the prior financial year can benefit everyone – particularly those who want to get a better handle on controlling their finances.

Personal financial audit
Evaluating your unique financial circumstances is a good way to determine what sort of goals to set. Some considerations in assessing your current financial health:

  • How much money do you owe on credit cards? You should also know if you are near or at your credit limits. Also take note of whether you only make the minimum payments each month on those charge accounts.
  • Is an increasing percentage of your income going towards paying down debts?
  • Do you pay your bills on time or are you often late with payments?
  • Do you have any savings to use in an emergency? Many experts believe that your savings should be enough to cover three to six months of your living expenses such as food, utilities, rent or mortgage, taxes and insurance.
  • Are you paying bills with money set aside for something else?
  • How much are you investing in a retirement account? Determine if you could afford to contribute a bit more of your paycheck to your 401(k), or if it might be necessary to decrease that personal contribution.
  • Get copies of your credit reports. Every consumer has the right to request a free credit report every year from each of the three major credit bureaus: Equifax, Experian and TransUnion. Review them for accuracy and correct any errors.

Financial goals
Budgeting is the most important thing you can do to help yourself reach financial success. If you don’t already have a budget, then creating one and sticking to it should top your list of goals for 2009.

A budget will help you get out of debt, which is another key step to taking control of your finances. By focusing on getting out of debt you can reduce the amount you pay in interest. It may take some sacrifice, but it is worth the effort. Stick to your budget to make it happen and set up a debt payment plan. Take advantage of free online budget monitoring tools such as Quicken and those offered by personal finance networks like Mint, Wesabe or Geezeo.

Saving is also a key factor in achieving financial security. Start with at least ten percent of your income each month and the money will add up quickly. If you can’t afford 10%, start with what you can and build up. You should consider saving in addition to your retirement contributions if you can afford it. You may also want to place your savings in safe investments at your local bank such as a CD, money market or interest bearing savings account. Investing allows you to grow your money at a much quicker rate. Having money set aside will prepare you to make adjustments along the way if your finances hit a roadblock in the coming year.

Partner with your bank
To achieve the goals you set for the coming year and beyond, your community bank might be the most important resource available to you. For 2009, take a look at your bank with fresh eyes. Especially in these volatile economic times, your local bank can provide counsel and services you might never have thought to take advantage of before. Your bank should have genuine interest in seeing you succeed. Create a partnership.

Trust in your bank is even more important after the economic difficulty of the past year. There has never been a better time to bank with a local institution with money to lend and where deposits are fully insured. You can be sure that your community bank is always looking for ways to serve its customers and making the community a better place to live.

Have a healthy and joyful holiday season and a happy new year!

James Oosterman is the Vice President of Melrose Bank. He can be reached by telephone 781-665-2500, online at melrosebank.com or on Facebook at facebook.com/MelroseBank.


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