Richard DiBiase's Top 5 Financial Tips for the New Year

After the holidays, money is tight for almost every family. With the recession, the situation can be incredibly stressful. So if you're looking to strengthen your financial standings in the New Year, Peters Township resident and Executive Vice President of Harvest Financial Corporation, Richard DiBiase, has some tips to get you headed down the right path.

1. Avoid using credit cards when possible. With extremely high interest rates (sometimes up to 12.99 percent or higher), it can be extremely difficult to pay these cards off once debt has been accumulated. For some, it may take more than 10 years just to pay off the debt on one credit card. If you do use the card, try and pay off the balance every month.

"Over the last 12 months, we have seen consumers and individuals relying less on credit cards and using debit cards instead," says DiBiase. "As a rule of thumb, use cash and only buy what you can afford."

2. If your employer offers a 401(k) plan, you should take full advantage of this opportunity, as it is extremely important. A 401(k) plan allows money to be invested pre-taxation and to grow tax-deferred until retirement. Many plans have a wide array of investments to choose from including mutual funds that invest in stocks, bonds and lifestyle funds, which invest based on your retirement age. Making these types of benefits now will allow you to rest assured that you will be able to financially survive post-retirement.

"Make sure you research your company's plan for matching contributions," says DiBiase. "This is free money. Contribute at least enough to match that amount and then from there, it's a comfort level based on what you can afford. If your company does not offer a 401(k) plan, you should look into a Traditional IRA or Roth IRA."

3. Learn how to correctly invest. Because of the economy many people are nervous about investing, but DiBiase reminds potential investors that the stock market is never without risk. If you worry that you do not personally know enough about investing to figure it all out for yourself, you should consult a financial advisor. This need differs for each individual, however studies have shown that individuals that work with financial advisors have produced better results than investors without.

"Normally the best time to invest is when other investors are shying away from the market," says DiBiase. "Our experience is that these markets offer many opportunities to profit for the future. As Warren Buffet says, 'Be fearful when others are greedy and be greedy when others are fearful.'"

4. Prepare for the unexpected. Many individuals find it difficult to spend money on ideas such as life insurance because they don't know when and/or if they will ever even use it. But life insurance is incredibly important in order to protect your family, even when you are no longer here to protect them yourself.

"Life insurance coverage should be an amount to cover living expenses for a certain period of time, especially if the deceased spouse is the primary bread winner," says DiBiase. "For young individuals this can be done in an inexpensive way, through the purchase of term insurance. For larger estates, we use permanent insurance to help pay for estate settlement costs, however this has become more difficult with the pending tax law changes."

5. Keep good financial records -- especially for tax purposes. If you consistently keep good records on an ongoing basis, filing your taxes will become an easy process. DiBiase also suggests every person should have at least three months worth of living expenses costs safely kept in a savings account, just in case of unforeseen or emergency needs.