Tips to help you reach goals like paying off debt, saving money and starting to invest.

Many people ring in the new year with resolutions to improve their finances. These resolutions often focus on tasks such as paying down debt, building up savings and starting to invest. Research shows that you’re more likely to reach these goals when you have a plan in place. Check out these tips to help you create a plan for success.

Paying off debt

While debt always means you owe a creditor money, the structure of debt varies from person to person. Some folks only carry a single debt while others have multiple creditors for things like student loans, credit cards, medical bills or car loans.

If you only have one debt, clearly you’ll focus on that. If you have multiple debts, make a list of each loan and its interest rate and then focus on one debt at a time.

Deciding which debt to tackle first is a personal decision. Many people choose to pay off the loan with the highest interest rate, since it’s the most expensive. Others pay down the smallest loan first, as this allows you to see significant progress more quickly. Either way is okay; the important thing is to pick an approach and stick with it. When you pay off one debt, move on to the next.

When it comes to debt, keep in mind that it’s not enough to simply pay off creditors. It’s important to look at the reasons debt piled up in the first place. Take a close look at your spending attitudes and habits, how your income compares to your expenses, and how an emergency savings account could help you avoid future debt. If you need help, consider talking with a financial counselor; this is a free service for Consumers members.

Reaching savings goals

Short-term savings goals are often associated with a specific desire. For example, you may want to save money to afford a vacation, pay for wedding or boost your savings. No matter what you want the money for, there are two primary ways to save: spend less on other things or earn more money.

If you adopt a spend less approach, identify specific things you’ll cut back on or eliminate in order to meet your savings goals. For example, if you usually spend $125 each week dining out, you could limit meals out to $50 per week. Even if you spend an additional $25 on groceries, you’ll be able to put $50 a week, or $200 a month into your Consumers savings account.

 If you choose to put your efforts into earning more, consider all your options. You might leverage your skills and seek a better paying job, take on a part-time job, provide meal delivery or rides through an app service, sell things you no longer need, or become a pet sitter or house sitter. There are numerous ways to earn cash! What you choose depends on your skills, interests and available time.

Starting to invest

Investing in stocks is one way to build more wealth, however, there are no guarantees that any particular investment will be profitable. That’s why beginners should take time to learn before they invest even a dollar.

Before investing in anything, make sure you understand the basics of how it works, how much it costs, and if any fees or commissions are charged.

Set a timeline for your short-term financial goals

Whether you’re paying down debt, building savings or building an investment portfolio, you need a timeline for reaching your goals.

The simplest approach is to decide when you want to reach your goal and then break that down into monthly steps. Here are some examples:

• If you want to pay off a $3,000 debt in one year, you’ll need to pay your creditor $250/month plus interest to clear your account.
• If you’re planning to spend $20,000 for a wedding in three years, your savings goal is $556 each month for the next 36 months.
• If you’d like to invest $5,000 each year, you’d designate $417 each month for this goal.

Remember, there are many free resources available for Consumers members to help you pay down debt, save and more. Check out our online resources or call us at 800-991-2221 and ask for you what you need.

Consumers provides banking services for more than 131,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.

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