5 Ways to Make a Better Plan for Your Money in 2016

financial growth plan for 2016...From professional football player to speaker and financial coach, Chris Hogan has been a staple among personal finance experts. The money guru once worked as vice president of a mortgage company and later turned to helping people successfully manage their money. As a finalist in the 2015 GOBankingRates “Best Money Expert” competition held in collaboration with Ally Bank, Chris Hogan offers this money tip for 2016:

The best thing you can do for your finances is to create a plan. Think about what your financial goals are and create a plan to reach those goals. The necessity of a plan sounds simple, but it is the one thing that many people overlook when it comes to their money. And a dream without a plan is simply a wish.

Follow these five steps to apply Hogan’s 2016 money tip to your life. From identifying key financial goals to paying down low balance debts, you can get your finances on track.

1. Identify your financial goals. Hogan said it best: Without a plan, your goals are a pipe dream. In 2016, consider what you would like to do for the next few years, and how you can manage your finances to make your dreams come true. Whether you’re saving for a house or car, as soon as you start mapping out what’s in store for the new year, you’ll see how much money you’ll need to save and what other steps you’ll need to take to reach those goals.

Hogan suggested you set deadlines, allowing you to see upcoming milestones. Just make sure the budget you have laid out allows you to succeed.

2. Set up a budget. Budgeting is one of the most essential parts of any money plan, yet about two-thirds of Americans don’t have one in place, according to a 2013 Gallup poll. One essential step to developing a budget is to write out your monthly income and expenses, like rent, mortgage, car insurance and groceries, and compare them. Knowing how much you’re spending in each category will help you identify where you’re overspending.

Cutting costs in certain categories, Hogan said in an ABC interview, is like getting a raise: “When you begin to give spending limits, it’s like you’ve given yourself a raise. You’ve now given yourself some money you can begin to save or attack debt [with].”

3. Tackle small debts first. As an associate of Dave Ramsey, Hogan is well versed in helping people reduce their debt. He suggested attacking low-level debt first: “The little $200 Home Depot store credit card? Knock that thing out, pay it off and get it out of your life, and then move to the next card.”

By paying off low-balance debts, you free up money you can put toward an emergency fund or other debts. By tackling debts with high interest, you also save yourself the money you would have otherwise put toward interest. Just be careful that as you free up more money every month you don’t start increasing spending.

4. Build up an emergency fund. One of the biggest elements of making a better money plan for 2016 is making room for an emergency fund. Hogan suggested opening a money market account, which can help your savings grow. “Once you get out of debt,” he said, “you need three to six months of money, however much it takes you to run your household, tucked away in a money market account for that rainy day.” If you’re struggling to make ends meet, set up a jar in the kitchen or bedroom and dump your change in it at the end of each day. Over time that money can help you curb the cost of an unexpected repair or other emergency.

5. Save for retirement even when you’re behind. Thirty-six percent of American workers have less than $1,000 in savings and investments, not including their primary residence or defined benefits like pensions, according to a survey conducted by the Employee Benefit Research Institute. Sixty percent have less than $25,000 saved for retirement. J.P. Morgan, however, advises you have at least $55,000 saved for retirement by age 40 if you make $50,000 a year. By 50, you should have $115,000 saved.

Don’t worry if you’ve fallen behind in retirement savings. Even if you can’t hit retirement savings checkpoints laid out by wealth advisers, the more money you save now will help reduce your reliance on Social Security when you’re older. “There’s still time on the clock,” Hogan said in a YouTube video. “We just have to get focused.” He advised you look to build additional income streams.

Whether you tutor on the side or sell a unique skill you have, generating additional income specifically for retirement is a great way to catch up when you’ve fallen behind. As part of your money plan for 2016, look to eliminate small debts holding down your budget, establish spending goals and a small emergency fund, and start contributing to your retirement.

6 Money Strategies for the Sandwich Generation

Three generations portrait of three women
When her father was diagnosed with a respiratory disease about seven years ago, Joy Frank-Collins juggled her work schedule and parenting demands to maximize the time she spent by his side. Frank-Collins, a 41-year-old who heads her own communications firm in Marietta, Ohio, also coordinated with her siblings to pay for expenses that weren’t covered by insurance. “If you know your parents will need your help, you have to think, ‘What can I set aside to provide the necessary support for my parents?'” she says. After a long fight with his illness, her father died at age 75 in January.

As a member of the sandwich generation — adults who simultaneous care for children and aging parents — Frank-Collins had to navigate what is becoming an increasingly familiar challenge. “Individuals who find themselves in the sandwich generation are forced with contemplating taking care of things today in a way that may negatively impact their future,” says Rebekah Barsch, vice president of financial planning for Northwestern Mutual. Family members might cut back on their work hours or sacrifice savings in order to care for aging parents, she adds. “The pressure, both financial and emotional, weighs on people,” she says.

Those pressures are one reason that 37 percent of Gen X, who are between ages 35 and 49, don’t feel financially secure, according to the 2015 Northwestern Mutual Planning & Progress Study of 5,474 adults. About 1 in 4 said they are “not at all confident” they will achieve their financial goals, and 2 in 10 said they believe they will never retire, largely because they won’t have enough retirement savings.

“The number of people who find themselves sandwiched between generations continues to grow as the baby boom generation gets older and is expected to live longer than ever before — longer than they’re capable of caring for themselves,” says Phillip Rumrill, ​a professor of rehabilitation counseling at Kent State University and co-author of “The Sandwich Generation’s Guide to Eldercare: Concrete Advice to Simultaneously Care for Your Kids and Your Parents.”

At the same time, he adds, children are living at home for longer, which means people in middle age are often caring for, and financially supporting, both generations at once. “We estimate that 1 in 8 Americans between the ages of 40 and 60 are caring for both children and parents or grandparents at once,” he says. That caregiving often coincides with intense years of career demands as well as the need to save for retirement.

If you’re a member of the sandwich generation, here are six financial strategiesto help your family get through the challenge:

Pick your priorities. “Maybe we start saving for college tuition later, or we save less now with the idea of ramping it up later, when our incomes are back at full stride,” Barsch says. She recommends making it a priority to continue saving for retirement, but to scale back in other areas, such as spending on luxuries such as vacation and cars.

Stick to a revised budget. Taking on responsibility for parents can make it especially important to hone your budget​, says ​Stacy Newton​, North and South Carolina division executive for SunTrust Bank. “Because they have so much on their plates, making a plan is critical. We encourage people to set limits on spending, shopping sales and to stay within their means,” she says. When it comes to vacation or holidays, for example, Newton suggests focusing on shared family experiences rather than dollars spent. She also urges people to use their banks’ spending alerts to stay within budget.

Give yourself an annual checkup. “It’s like going to the doctor,” Newton says. “Take a few minutes off work and sit down with a financial adviser to review current financial priorities, and make sure everything is aligned.” A recent SunTrust survey of 519 adults with incomes $75,000 and up found that amongthose in middle age (ages 45 to 54), just 37 percent say they are saving enough to live comfortably in retirement, compared to ​57 percent in other age groups. An annual check up can help determine where you stand and what adjustments need to be made.​

Plan for eldercare. While parents often anticipate the costs that come with children, they are less likely to budget for the expense of caring for their parents, Rumrill says. Those costs can include paid caregivers, a nursing facility or medical expenses, he adds. Budgeting in advance, as well as checking for any available benefits through the federal government, particularly Social Security or veterans’ benefits, can help ease some of that pressure, he says.

Make use of new technology. Kyle Hill ​co-founded HomeHero.org, a website that helps families find and hire in-home care for seniors in California and has plans to expand to other states in 2016. Users can browse caregivers and also use the site to make payments. For Hill, the need is personal: He watched his father struggle to care for his 98-year-old mother from a different state. “There was no easy way to manage her care from far away,” he says, particularly to oversee caregiver shifts and activities. Automating the process through a website makes it easier and more affordable for family members to find high-quality, paid caregivers, he says.

Coordinate with siblings. Lan Jewel​, 45, a communications professional in New York, worked out a plan with her four siblings about 15 years ago, before any of them had the additional financial pressure of children. Her parents had limited savings, so the siblings all chipped in to purchase long-term care insurance, and some also send money to them once a month. ​”It has definitely put a strain on our relationships since the financial burden has increased,” she says, and the stress from the Great Recession didn’t help. “But this is an obligation that I feel I have to juggle, even as the expenses of rearing two​ children in New York City increase as my kids get older. My parents sacrificed so much for ​us kids,” she says.

Frank-Collins also suggests working through any tensions with siblings and other family members before a health crisis hits, because coordination becomes essential. “We would almost tag each other out at the hospital,” she recalls, referring to the frequent bedside visits when her father was sick. “You have to sit down and have these conversations that you never thought you would have. Because you’re the person in the middle, you have to prepare.”

Yellen Signals Growing Likelihood of December Rate Hike

US-ECONOMY-FINANCE-CONGRESS-YELLENWASHINGTON — Federal Reserve Chair Janet Yellen told Congress Thursday that economic conditions appear to be improving enough for policymakers to raise interest rates when they meet in two weeks — as long as there are no major shocks that undermine confidence.

Yellen said that even after the first rate hike, the Fed expects future rate increases will be at a gradual pace that will keep borrowing costs low for consumers and businesses.

In testimony before the Joint Economic Committee, Yellen warned that waiting an extended period of time to start raising rates would carry risks.

“Were the FOMC to delay the start … for too long,” she said, “we would likely end up having to tighten policy relatively abruptly to keep the economy from overshooting” the Fed’s goals for unemployment and inflation.

“Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into a recession,” Yellen said.

She also cited concerns by Fed critics that keeping rates exceptionally low for too long “could also encourage excessive risk taking and thus undermine financial stability.”

Fed policymakers meet on Dec. 15-16. The Fed’s key short-term rate has been at a record low near zero for the past seven years.

Many private economists are forecasting the first rate hike by the Federal Open Market Committee, the Fed’s policy panel, will be a modest quarter-point move, followed by four more quarter-point moves over the next year.

“Between today and the next FOMC meeting, we will receive additional data that bear on the economic outlook. These data include a range of indicators regarding the labor market, inflation and economic activity,” Yellen told the JEC. “When my colleagues and I meet, we will assess all of the available data and their implications for the economic outlook in making our decision.”

The Labor Department will release its November employment report on Friday. Analysts believe the data will be key in determining whether the Fed boosts rates this month.

Asked about the upcoming unemployment report, Yellen said the Fed will be watching for “a continued solid trend of job creation” that would indicate the economy has good momentum going forward.

Yellen repeated past comments that she believed two key factors keeping inflation below the Fed’s 2 percent target — the rise in the value of the dollar and falling oil prices — were likely to fade over time.

Strong Signal

Private economists said Yellen’s remarks over the past two days sent a strong signal that the Fed is ready to start raising interest rates at its meeting this month.

Gus Faucher, senior economist at PNC, said he was looking for a rate hike “barring much weaker data over the next couple of weeks.”

The Fed has left its target for the federal funds rate, the interest that banks charge on overnight loans, near zero since December 2008. It has used ultra-low borrowing costs as a way to stimulate economic activity and fight the worst recession since the Great Depression of the 1930s. The Fed has not raised the funds rate since June 2006.

Yellen said that the Fed currently anticipates that even after further improvements in the labor market and inflation, economic conditions are likely to warrant lower rates than normal “for some time.”

She said that a Fed move to start raising rates will be a sign of “how far our economy has come in recovering from the effects of the financial crisis and the Great Recession. In that sense, it is a day that I expect we all are looking forward to.”

Yellen spoke shortly after the European Central Bank announced that it was cutting a key interest rate and extending its stimulus program to enhance efforts to bolster the 19 European countries that use the euro currency. This action disappointed investors, who had been looking for stronger moves.