By Treasurer David McRae
Some have denoted the second Friday in January as “Quitters Day,” the unofficial date when New Year’s resolutions get dropped. How are yours coming along?
The funny thing is that most folks will do better on their New Year’s resolutions than they think. In fact, a Forbes Health poll explains the average resolution will actually last about 3.74 months. Sure, that’s still not permanent, but it’s awfully better than two weeks!
It’s probably no surprise that the Forbes Health poll found “improving my fitness” to be the top resolution, with 48 percent of respondents listing it. But “improving my finances” wasn’t far behind at 38 percent – and that’s what I’d like to dig a bit deeper into today.
Whether you’re still on track with your financial resolutions or if you’ve already fallen off the bandwagon, let me offer a few tips to get your financial house in order over the coming year.
First, understand your income. Whether you are part of a single- or dual-income family, it’s important to understand what money can be expected to come in throughout the year (once taxes have been taken out, that is). I know it’s not an exact science—people change jobs, pick up second ones, or take time off for unexpected emergencies, but do what you can. This will give you a baseline from which to build your goals.
Second, allocate your monthly paycheck. Smart and healthy budgeting starts by allocating your income into three buckets, according to financial planners: needs, wants, and savings! The exact allocation will vary by your family’s unique situation, but many recommend a 50/30/20 rule. This means spending 50% of your income on necessities such as food, housing, utilities, etc., 30 percent on wants such as vacations, subscriptions, eating out, etc., and putting 20 percent into your savings. Would a structure like this work for your family?
Finally, set your financial priorities. Understanding your long-term and short-term priorities gives focus to your spending and savings, while also helping you set expectations for what is realistic. You want to purchase a car? Ok, if you put half of your monthly savings toward the car, how long will it take you to save for the down payment?
The State Treasury has posted more resources to help with budgeting and financial planning at treasury.ms.gov/financialeducation. I’m hopeful these will help empower you to buck the trend and keep your financial resolutions through the year! Have a safe and healthy 2024!
Mississippi Treasurer David McRae is the 55th Treasurer for the State of Mississippi. In this role, he helps manage the state’s cash flow, oversees College Savings Mississippi, and has returned more than $80 million in unclaimed money to Mississippians. For more information, visit Treasury.MS.gov.