The beginning of the year is a good opportunity to think about what you hope to accomplish in the coming months, and it’s also a common time for compensation increases and/or tax filing preparations. If your pay does increase or you are expecting a tax refund, use this to strategize your next steps to align with your financial obligations and priorities. A pay raise or a tax refund is a great time to take the opportunity to pay off debt, build an emergency savings, and even increase the contribution to your retirement savings plan.

Below are some ways to ensure that your increased earnings and/or refund will be put to the best use:

• Pay off credit card debt. This can be a top priority, especially if high interest rates are involved; interest may be causing you to spend more than what the purchases are worth, if balances are being carried over month to month. Limiting credit card usage enables more income to be used for the present and future vs. paying for the past.
• Invest more for your retirement. Consider increasing your contribution to your retirement plan. Challenging yourself to save a little more, as little as 1% can make a big impact in achieving the retirement you envision.
• Build your emergency savings. Having about three to six months of expenses in an emergency fund is a good goal to have. This provides peace of mind – if unexpected expenses occur, you will be prepared to cover these costs instead of having to turn to debt.

Giving your financial priorities a boost each year, coincident with when you may have access to some extra money, can maximize your financial success without “feeling” the sacrifice often associated with saving and paying down debt.