New Year, New You: Getting Your Finances In Order

Woman with debts

Wouldn’t it be great if we could go into the New Year free of financial burdens? How nice it would be to wave goodbye to our debts and say “it’s been nice knowing you,” then leave them back in 2015 where they belong.

Unfortunately, when it comes to our finances, it isn’t that simple: We have to take it all with us, the good, the bad and the ugly. But that doesn’t mean that we can’t start fresh. According to Bonnie Loedel, Chief Fiduciary Officer at Cape Cod Five, when it comes to getting our finances in order, “the new year is a great time to reflect on the past 12 months, address old habits and set new goals.”

So how do we create an action plan? For many of us creating budgets and getting our finances in order can seem like an overwhelming task. The good news is that we don’t have to go it alone. There are many tools and resources out there designed to help us get started and to stay on track.

Many financial advisors suggest using a personal finance app, like It allows users to keep all their financial information in one place, to set up budgets and track spending and investment patterns. Local financial institutions, like Cape Cod Five — where the mantra is “financial education” — have a variety of financial tools and calculators available. Cape Cod Five also offers financial advisory services and their financial consultants, Melissa Hennessey & Jonathan Kelly offered the following tips to help get your finances in order for the new year:

We have all received a bill from a cell phone or cable company and thought it was too high and surely there were better, more reasonable options available. Now is the time to evaluate all your recurring expenses, from cell phoneS to insurance, and see if you can cut costs. Often this doesn’t mean switching companies, but merely letting your current vendor know you will be making changes if the bill doesn’t come down. Addressing recurrent expenses can result in large costs savings over a year.

Create an action plan to pay off your credit card debt. First, tally up your credit card balances. Next, set a goal for how much you can afford to pay monthly in excess of the minimum balance. Once an account is paid off, apply the payment to the outstanding balance on another card. Online tools such as can help you create a plan.

The best way to make savings a habit is to automate. If you can’t see the money, you are less likely to spend it. If your employer offers direct deposit, contact your HR or Admin Department to find out what forms you will need to complete to create an automatic savings plan. You can also set up recurring transfers between checking and savings accounts online at most banks.

It’s important to start saving for retirement as soon as you enter the workforce, even if it’s only a small amount at first. To start, you’ll need a retirement vehicle for your savings. If your employer offers a retirement plan, find out when you will become eligible to participate. For everyone else, open an IRA (Individual Retirement Account) that best meets your needs (Traditional, Roth, SEP or Simple).

Are you saving enough for retirement? Instead of focusing on a large amount to save, try focusing on the percentage of your income you are currently saving. You should aim for 15 percent of your gross income. So if you make $70,000 a year in salary, about $10,000 should be going into your retirement account, whether this is a 401k or an IRA. Employer contributions can help towards this goal. If you save 10 percent of your salary and your employer matches 5 percent, then you’re on the right track. (2016 limits for IRA accounts are $5,500/$6,500/50+), 2016 limits for 401K/403b $18,000/$24,000/50+)

How are your assets invested towards each specific goal? If you’re saving for a new car then you may want the money in something very safe such as a money market or savings account. For retirement you need growth and that means having some of your assets invested in stocks. How much depends on your risk tolerance and time horizon. Asset allocation is a fancy phrase for how much of each asset class – stocks, bonds, and cash, you own. You should have a target percentage for each asset class and check each year to make sure you’re close to your target.

And while the New Year maybe a great time to create new financial habits and set new goals, it’s never too late to start. Good Luck and Best Wishes for a financially happy 2016!

To win $500 towards making your New Year’s Resolution a reality, click here!

— By Kristen Levy

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