A New Year approaches and with it the ending of the holiday season. As I reflect on my own celebrations, I am reminded that memories aren't the only lingering remnants of 2017. For many, the holiday budget has morphed into bills and payment plans. What better time than now – the start of a new year – to review your financial situation and commit to a realistic money management plan.
Want to lower your debt? Increase your savings? Boost your investments? I have always been a fan of using the new year for fresh starts and encourage you to do the same. Here are five steps you can take to get started:
1. Evaluate Your 2017 Cash Flow.
It’s all about income and expenditures. Pull together the year’s worth of receipts – payments, credit card charges, investments, savings – to see what you spent and how much you saved. Do you spend too much? Is your income enough to cover your debt? If not, it’s time to consider what changes you should make in 2018. That means taking a hard look at your spending habits.
2. Make a Realistic Plan for 2018.
A realistic money management plan is the best strategy for reaching your financial goals. Paying off debt, adding to savings, reducing spending are all doable goals. Start with a budget. It is the best way to see the balance between income and expenses and can help you manage your money. Make sure that you review your budget monthly – it won’t assist you if it is filed away.
3. Change Your Spending Habits.
So many of us are impulse spenders. Good deals, minimum monthly payments, and credit cards all make it easy to buy that item that would otherwise seem too expensive. Unfortunately, that item probably IS unaffordable. If you are tempted by these offers, use your budget to regain control. Be clear about the difference between your fixed expenses (mortgage, rent, utilities, insurance, loan payments) and what is left for discretionary spending. Then, take a critical look at how you allocate those discretionary funds.
4. Commit to a 52-Week Savings Plan.
There are two kinds of savings to consider – long-term or retirement and emergency. Make sure that an emergency fund is an item in your budget and set aside a portion of every paycheck. The rule of thumb is that an emergency savings fund should cover three to six months’ worth of living expenses. Take advantage of any employer-sponsored retirement accounts. Even small amounts deposited on a regular basis will add up over time.
5. Get Professional Advice.
You don't have to do this on your own. An independent financial advisor can help you develop a financial management plan that is compatible with your budget, your current situation, and your lifestyle goals. An advisor can also identify specific problem areas and help you work out ways to move forward.
Contact me, and we will arrange to meet at my office, or another location convenient to you – your neighborhood or near your place of work. You'll be surprised at how small changes can make big differences in the way you manage your finances.
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.