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What Will 2018 Mean for Me Financially?

For an answer, look to your personal goals rather than outside forces.

Little about the future is ever certain, and as with any new year, 2018 brings with it a series of financial questions that have yet to be answered.

Changes in the federal tax code have made headlines, but what will they mean for me? Will the housing market continue to rise? If the economy is strong, will interest rates rise?

Predicting what awaits us in the economy is an imprecise endeavor at best, and a fool’s errand at worst. Even in good times, the unknown can lead to anxiety.

But sometimes we focus too much on outside forces. Instead, 2018 should be a year of focusing on what is in within our power — namely how we manage our own finances.

Being sound financially can help anyone weather the unknown, and there is no better time to review where we are financially than during the turn of a new year. Doing so will help ensure financial stability regardless of what the future will bring.

Recalibrate your own financial picture

Life circumstances change all the time regardless of what happens in the broader economy. Promotions at work can change your long-term financial outlook, or a child on the way will forever change your goals. Whatever the circumstance, it is wise to assess your financials situation and recalibrate your goals.

The key is to budget accordingly based on any reassessment. Only about a third of American households compile a detailed budget, but knowing precisely how much money comes in and how much goes out each month is a key to financial stability. Most financial institutions offer useful online tools that can help you set and stick to a budget.

Of course, one of the tenets to being fiscally sound is to leave a cushion of savings that will help smooth any rough patches. To successfully build savings, learn to pay yourself first. Plan to set aside a certain dollar amount with every paycheck based on your current budget, then deposit it into a savings, CD, or money market account. If you can do this before you spend a nickel on anything else, your savings will grow.

Stay on top of your credit

If you have a big purchase in mind that will require a loan — such as for a home or car — you need to take steps to stay on top of your credit and preserve (or improve) your credit score.

Most importantly, if you have high credit card bills, or your debt in general is too high — both of which negatively impact your credit score — create a plan to pay down debt.

Each credit inquiry affects your credit score, so be judicious in how often you seek credit. And being able to differentiate good debt from frivolous debt is important. Using debt as a means to afford a home is an obvious example of good debt. Overspending on a credit card for items or services that are not necessary is bad debt.

And finally, many are predicting interest rates to slowly begin to rise over the year. So if you are planning a big purchase, stay on top of interest rate news.

Changes ahead

The elephant in the room is the recently passed tax reform bill. Congress’ tax reform legislation, which has been implemented in time for the 2018 tax year, will have far-reaching effects on anyone who pays federal income taxes. Taxpayers in Oregon — where the amount of property and state income taxes that can be deducted from federal income taxes will be limited — will have to pay particularly close attention to the changes.

Predicting what awaits us in the economy is an imprecise endeavor at best, and a fool’s errand at worst.

In the end, knowing your tax burden is important to fully understanding your financial situation. Seek help from a qualified tax professional who can help you understand what your liabilities will be in 2018, and help set you on a safe course.

Of course, these are complicated issues. Many local financial institutions, including most local credit unions, can offer general advice to improve credit worthiness. For those who are more established, a Certified Financial Advisor can help you reach your goals.

The bottom line is that being financially savvy now will help prepare you for any changes that the new year may bring.

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