Central New Yorkers might take some time as the year draws to a close to think about their finances, past and future. Citizens Bank here in New York has some common sense tips, such as creating a budget based on the past year’s spending. Manager of Everyday Banking John Rosenfeld says people are often surprised where their money went. He suggests sometimes professional advice can help.
“The average consumer spends more time researching and selecting a refrigerator than they do in determining where they’re going to put their retirement funds. For retirement, refinancing a student loan, most people don’t even realize you can do, or credit cards, are you paying too high an interest rate? Are there different options that are better suited to the way you spend money.”
Rosenfeld adds some banks and credit cards have statements that show spending in different categories, such as travel or restaurants. They can be used to set spending – and savings – goals for the coming year.
He also reminds people, now is the time to maximize contributions to 4-0-1-K’s and other retirement accounts.
CITIZEN BANK YEAR-END TIPS
- Review your spending in 2014 and adjust your 2015 budget –take control of your spending and gaining a better understanding of where your money is going. Small, but recurring expenses like your morning latte can add-up. Compare your monthly income to what you're spending every month. Adjust your 2015 budget accordingly so you start the New Year with realistic goals and expectations.
- Make a plan to pay off holiday spending debt – Many people use credit cards for holiday spending to earn cashback or rewards points, but that really only makes sense if you pay it off quickly. Set a plan to pay off your holiday debt by a specific date, such as Valentine's Day. This ensures you don't pay interest on the credit debt, and negate any savings you got up front.
- Max out your retirement savings – Contribute as much as possible to your 401(k) before December 31 – most workers can contribute up to $17,500. To make the most of your IRA, you have until you file your tax return in 2015 to max out your contribution, which is set at $5,500, with an extra $1,000 "catch-up" option for people over the age of 50.
- Refinance or consolidate your student loans – A lot of people don’t realize that you can refinance a student loan just like a mortgage, even if it was a Federal Student loan. Refinancing can help you lock in a lower interest rate and save money going into 2015.
- Review your credit card interest rates -- If you're still planning to carry a high amount of credit card debt into 2015, check for end of year specials that allow you to transfer credit card balances with low fees and offer 0% interest for the first year. A few banks may even waive the balance transfer fee (Typically 3 percent).
- Seek advice – Talk with your banker, financial advisor or accountant for additional suggestions. If you’ve never met with a financial advisor, now is a great time of year to make that first appointment. Many offer free initial consultations to help determine if this option is right for you.
Some things, such as retirement contributions and how to pay off holiday debt, should be figured out right away. Citizens Bank Manager of Everyday Banking John Rosenfeld says you can also get some planning help.
“Some banks and some credit cards send out a year-end statement that breaks down how you may have spent your money by merchant categories, such as travel or restaurants or entertainment. I think most people are probably surprised how that distribution plays out in a given year.”
He suggests using those reports and your own assessment to plan spending and savings in the coming year. We’re coming out of a financial crisis, which Rosenfeld says usually gets people to save more, go into sort of a protective mode.
“I’m here to tell you that after the recent financial crisis our memory was particularly short because savings rates are starting to deteriorate again. And I think that’s a bad thing; generally people are happier when they have security of having funds put away for both emergencies as well as planned future purchases.”
Rosenfeld says whether you make any resolutions or not, this is a good time to assess spending, consider tax implications, loan and credit card rates to make 2015 more fiscally sound.
