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February Is Often Overlooked When It Comes to Making a Financial Plan

February Is Often Overlooked When It Comes to Making a Financial Plan

February 16, 2023

Now that Punxsutawney Phil has seen his shadow and we will have six more weeks of winter (which would have been the case whether that groundhog saw his shadow or not), you can use the last weeks of winter to get your financial house in order.

February is a month that is often overlooked when it comes to financial planning. Everyone pays attention to January when a lot of resolutions are made, April when personal income taxes are due, and the end of the year when a charitable contribution may help reduce your tax bite, but you can take some significant steps in February that will help you for the rest of the year.

First, if you haven’t taken a close look at your spending habits recently, this can be a good month to look at where you might be able to cut back.

Many of the charges for holiday shopping come due in January and February. Because of rising interest rates, it’s becoming more expensive to carry credit card debt.  If you haven’t paid off your holiday shopping yet, you may want to take one of the following approaches:

  • Pay your credit card bill more frequently. Credit card companies will accept more than one payment per month, and it can help you save money in the long run if you pay money when you have it instead of waiting for the monthly bill to arrive.
  • Get a credit card with a lower interest rate. Many people don’t even look at the interest rate their card charges, but it can vary a great deal from card to card. If you can find a card that allows you to do a no-fee balance transfer – take money you owe on one credit card and move it to the lower interest rate card – then you can save a significant amount of money. One word of caution – don’t be late with your payments. Late payments can incur additional fees and negate any savings that you might receive from the no-fee balance transfer.

Second, focus on savings.  You want to build an emergency fund so that you don’t need to pay by credit card whenever something unexpected occurs. If you don’t have an emergency fund, start with a goal of $1,000. That’s large enough to cover many unexpected expenses, but not so large that it seems unattainable. You probably won’t be able to reach $1,000 immediately, but that’s okay. If you start in February saving $20 a week (which can be done by eating out one less time per week), you will be close to your goal by the end of the year.

Depending on your personal circumstances, there may be other steps you can take to improve your financial health but focusing on savings and examining your spending are the first steps for many people.

If you have been meaning to create a financial plan, but don’t know where to start, Compass Wealth Management can help create a plan with you. Let’s talk.