Financial tips to begin 2014

BY MAYRA DIRICO

As the New Year begins, staying committed to improving your current financial situation is one of the most important things to include on your “to-do” list.  Although everyone has unique financial goals and objectives, these tips can help anyone position themselves to be financially stronger in 2014.

First, carefully examine your credit card statements. If you are carrying a balance month-to-month and paying interest on it, you should take one of two actions:

• If you have surplus cash, determine whether your savings rate or your credit card interest rate is higher. If your credit card rate is higher, then paying off your debt should be the priority.
• If possible, transfer your debt to a no-interest credit card, or at least one with a lower interest rate. You also need to compare the interest rates. There are numerous credit card offers available that extend zero percent interest to users for the first year, and your local community bank may offer more favorable interest rates.

One precaution: read these offers carefully and make sure that you’re able to pay down the debt before the interest rate changes.

It is also important to look at your savings balances. The rule of thumb is to have at least six months of living expenses in liquid funds in case of an unexpected life event such as unemployment or an illness. With interest rates being so low, it is recommended that you set aside even more if possible –up to 12 months of liquid funds.

How can you calculate how much you need? There are numerous easy-to-use calculators available online that will help you itemize your monthly living expenses.

In order to be prepared for any situation, you should adjust your finances as life evolves and things change. Understand the important financial decisions you need to make at your current “life-stage,” such as preparing for college or retirement.

Use the New Year as an opportunity to discuss with your family and list any questions that you may need to address with a financial services professional.  Local community banks can provide insight into various financial scenarios and offer solutions to meet your financial needs.

It also can never hurt to seek advice from a financial advisor. You don’t have to be a savvy investor to take advantage of investment options that will position your long-term goals of retirement or college planning. Simple investment products can provide a steady income stream and help reduce taxes so your money grows faster.

Finally, stick to your financial resolutions. Both long and short-term goals are important to keep in mind as the New Year begins. Long-term goals such as retirement and college planning need to be evaluated annually, while short-term goals such as emergency funds savings need to be evaluated monthly.  Keeping a household budget is extremely important to ensure you are staying on track with your savings goals.

Maintaining a resolution is essential to a financially stronger year. You must, however, have a plan in place and understand the important decisions you have to make at every stage in life. Resolving to take these steps in 2014 will help you position yourself better financially throughout the year.

Mayra DiRico is senior vice president/director of retail banking at Astoria Federal Savings, a full-service community bank headquartered in Lake Success, N.Y., serving personal customers and businesses of all sizes throughout the New York metropolitan area. Recently, Astoria Federal commemorated the 125th anniversary of its founding in Long Island City in 1888.