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Baseball and softball season is upon us! Back are the days of hearing the crack of the bat and smack of the glove, and treating ourselves to hot dogs and peanuts.
More than other sports, baseball and softball treasure individual achievements that stand out over the course of a season. There are walk-off home runs, no-hitters, even hitting for the cycle (when a player hits a single, double, triple, and home run all in one game).
The stakes might be different, but you too can hit for the cycle when it comes to managing your finances. Here’s the game plan:
Get started by divvying up your savings accounts to match your financial goals. Think of this as knocking a base hit up the middle.
Let’s face it: having one lump savings account can be misleading. Seeing one big balance number could make you think you’re doing a better job of saving than you actually are. Instead, separate your savings efforts into goal-specific accounts so you know exactly how you’re progressing toward your individual savings goals.
For example, if you have $8,000 in a consolidated savings account, you might think you’re doing a really good job. But by splitting those savings into their own goal-specific accounts, you’ll clearly see you have $1,000 saved for your summer trip, $2,000 for a new car, and $5,000 for emergencies. That way you know if you’re ahead of or behind schedule with any of your savings.
Where are you in your career? Are you a rookie who hasn’t started saving for retirement yet? A 10-year veteran who's contributing without rhyme or reason? No matter where you are, you could always benefit from creating a retirement action plan. Think of this as belting a line drive into the outfield gap.
Start your plan by taking a hard look at your budget to see how retirement fits into the equation. If you’re coming up short with your retirement contributions, look to your other savings goals to see if some of those allocations can be put on hold for now.
Once you’ve figured out how much you’re contributing today, you — and your spouse or partner, if you have one — can come up with a plan for how your contributions will change over time. A good rule of thumb is to increase your contributions by 1% of your annual salary every year. Rookies can score more on compound interest by boosting contributions while they have fewer expenses to pay. This way, the pressure to contribute is reduced by the time kids and a home come into the picture.
Regardless of how much you contribute, a plan is essential. Otherwise you could end up swinging at the wind and fouling off good pitches to hit. And don’t forget to step out of the box occasionally to set up periodic reviews of your plan to see if it needs any adjustments.
Good credit is critical to your financial future. If big purchases like a home or car are waiting at home plate, good credit will have you taking an aggressive turn at third base, on the doorstep of scoring. That’s because good credit makes or breaks your eligibility for better rates, which could mean paying less in interest over the life of your loans.
Start implementing responsible credit practices to help take your credit to the big-league level. If you have bad credit, make it good. If you have good credit, strive for great. Once you have beaten out a triple, there’s only one goal left to reach.
For so many, student loan payments tie up hundreds of dollars each month over many years. That’s why making your final student loan payment deserves a victory lap around the bases! Having those funds back at your disposal means added resources to allocate elsewhere — your child’s 529 plan, your own retirement fund, home savings, or any other goal.
Maybe you’re still years away from that final payment. That’s OK — you can find some relief by looking into refinancing your loans. Or you could try to expedite the repayment process by contributing extra funds each month (just make sure the extra money is applied to the principal). That way you’ll be closer to starting your home-run trot.
If you’re not satisfied with just hitting for the financial cycle, here’s another challenge: put yourself in position to buy a home. For some, that could mean making the final push to reach their down payment target; others might be further away and need to create a savings plan to buy a home in years to come.
In a lot of ways, hitting for the cycle is a good precursor to hitting the grand slam of buying a home. Think of it as loading the bases. You can lead off by opening a separate savings account for your down payment, and then improve your credit in order to qualify for the best possible mortgage rate. Finally, you can load the bases up by paying off your student loans to lower your debt-to-income ratio (DTI). Once you do all these things, then you’ll be free to swing for the fences.
Hitting for the cycle is a rare feat in baseball and softball. The financial cycle might not be as difficult, especially since a 95 mile-per-hour fastball isn’t involved. But it still involves digging in, focusing, and keeping your eye on the ball. Checking these milestones off your list will help you reach your financial goals, both in the near future and decades down the road.
We are committed to helping you reach your potential by providing personalized solutions. Our dedicated colleagues can steer you toward the right product to help you reach your goals. To learn more, please call 1-877-360-2472, visit us online, or visit your nearest Citizens Bank branch.
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