WALNUT CREEK, Calif. — WALNUT CREEK, Calif. -- The new year is upon us, and with it comes the potential to improve your financial situation.
While that goal may seem easier said than done, there are steps consumers can take to make 2008 a better financial year than 2007 - steps that will help you save money, improve your credit score and pay down your debts.
Setting up a budget is key to any plan involving the management of money.
"First off, you have to have a reliable budget. It doesn't make any sense if you are making $100,000 a year and spending $110,000. Figure out what are your financial expenses: rent, mortgage, payments for insurance, how much you spend on food and clothing," said Ron Flaiani, director of financial services at Fremont Bank.
As a general rule, try to set aside 10 percent of income toward retirement savings, he advised.
Consumers investing in a traditional 401(k) or other retirement account funded with pretax dollars should try to contribute the maximum amount possible, Flaiani said.
"A lot of people just put 3 percent [of their paycheck] because the company matches 3 percent," he said. "If they are not maxing out pretax contributions to their 401(k) they need to look at that."
Selecting the right 401(k) that best meets long-range retirement needs can be a challenge for employees who participate in these retirement plans.
"It's very important that [employee] participants know what options they have in their plan," when selecting a fund, said Catherine Miller, vice president of 401(k) education for San Francisco-based Charles Schwab Corp.
To that end, consumers should see what kind of investment assistance options are available to them through their 401(k) plan.
Reviewing insurance needs should be done on an annual basis, advised Gary Finnegan, senior relationship manager with the wealth services division of Fremont Bank. A lifestyle change such as a marriage, divorce, or a new child in the family could require a change in coverage provided by a life, disability or other policy.
Credit - how it is managed and used - is a key factor that needs to be considered to have a good financial life, experts point out. After all, your credit score is used by banks and other lenders to help decide whether you qualify for a car loan, the interest rate you pay on a home loan or credit card, or if a landlord will rent you an apartment, among other things.
