The start of a new year is an ideal time to check in with your finances and determine if any adjustments need to be made. Assessing how and what impacted your finances in the past year can help you get a better understanding of your financial situation going into the new year. Your wants and your needs can change from year to year so it’s important to ensure that you are saving adequately for the future.
Below are three areas to consider checking in with your finances.
1. Retirement Plan and Savings
Everyone wants to be able to retire one day, and making sure your retirement plan aligns with your retirement goals is critical. Job changes, income changes, and other life changes can all impact your retirement plan and your ability to save. Charles Claver, Senior Vice President and Family Wealth Advisor, said “A one-time retirement plan is generally not enough to fully grasp all of the financial twists and turns that people are likely to face.” Checking in with your retirement plan and meeting with your First Bank Wealth Advisor is the best way to stay on track for retirement and ensure your savings are sufficient. Claver mentioned, “A retirement plan needs to be updated regularly to account for developments in life, changes in the market, and for general financial health.” Likewise, once you are able to retire, reviewing your retirement plan while retired is just as important as reviewing it when you are preparing for retirement. Claver concluded with, “Retirees are well advised to meet with their financial advisor at least once a year to make sure that everything is still on track.”
For a professional review or second opinion on your retirement plan, find a First Bank Wealth Advisor here: Meet the Team.
2. Emergency Fund
Your emergency fund is just as important as your retirement plan and savings. An emergency fund is a separate savings fund that you intentionally contribute funds toward to help cover the financial costs of an unexpected emergency. It’s ideal to keep these funds in a separate savings account to resist the urge to spend the funds on other things. According to a CNBC article, almost half of Americans struggled with being able to afford even a $400 emergency before the pandemic. Most experts recommend saving at least three to six months of living expenses. Saving as soon as possible will help prepare you financially should an emergency occur, but make sure you are saving an amount that you are comfortable with and that fits into your budget.
Read more: Starting Your Emergency Savings Fund
3. Sinking Fund(s)
Your sinking fund is an important fund to contribute money to regularly as well. A sinking fund is similar to an emergency fund, but it differs from an emergency fund, because you won’t be saving for an emergency. Instead, you’ll be saving for planned and specific expenses. Examples of sinking funds include home repairs, medical expenses, vacations, debt repayments, birthdays, or holiday gifts, etc. Since these funds are typically saved for over a lengthy period of time, utilizing Plinqit, First Bank’s savings app, can be an ideal way to save. Securely linking to your First Bank accounts, you can set a savings goal and have money transferred automatically at a cadence you choose for continuous saving.
As you prepare or tweak your budget for 2022, keep in mind these three important aspects of your financial future. Start saving for your retirement, emergency fund, and your sinking fund(s) as soon as you are able to do so. Our savings calculators can help you determine an appropriate amount to save. This can help put you on the path to financial wellness and prepare you for the future.
To learn more about how our products or services can help you on your financial journey, contact a trusted First Bank representative.