Most Budgets are Like Crash Diets

Most budgets are like crash diets: If they are too onerous, you won’t stick to them.

The average American saves less than 4 percent of his or her income, and nbsp;according to the Bureau of Economic Analysis. The low savings rate, which is an average, disguises an even worse reality for some people. More than half of all Americans have less than $1,000 in a savings account that could help them in an emergency, and nbsp;according to a GOBankingRates survey.

How can you get started? Here are five financial tips that can help you create a budget to follow in 2018:

1. Pay down consumer (credit card balances or auto loans) and student debt

2. Establish an emergency reserve fund of six to 12 months of living expenses.

3. Maximize retirement savings (the 2018 limit for 401(k)s, 403(b)s and 457 plans is $18,500 or $24,500 if you are over age 50; the limit for Traditional or Roth IRAs is $5,500, $6,500 for those over age 50. If you are self-employed, the limits are higher.)

4. Fund a 529-education fund (now expanded via the tax plan, to include private or parochial school for up to $10,000 in tuition and other expenses).

5. Establish a general investment account to fund anything from a second home to an accelerated path to retirement.

Think positive, recognize that the goals you’ve set are the ones YOU want, and use automated tools whenever possible. Psychologists note that change requires new thinking. Instead of hyper-focusing on the budget itself, remind yourself why you are doing what you are doing. Contact your advisor to create a budget for your family or business and take advantage of our full suite of financial planning tools!