It's mid-January. For anyone whose New Year’s resolutions involve a financial reset - a commitment to smart budget management - it’s a great time to reflect on your approach. You can make 2019 the year that you commit to savings and investing, create realistic goals, and take control of your spending. FINRA offers these tips to make 2019 your strongest financial year yet.
1. Evaluate Your Spending Plan or Budget
Having a budget—call it a spending plan if you like—is fundamental to your financial health. Those with a budget are more likely to spend less than their income, and considerably more likely to have set aside emergency funds. Even if you are one of those who
2. Set New Goals
The start of a new year is an excellent time to reflect on how far you've come toward meeting your savings goals—and to celebrate your accomplishments—before setting new goals for the year ahead. Savers who report working toward long-term goals are much more likely than those who do not to:
- be satisfied with their personal finances,
- spend less of their income,
- have no difficulty making ends meet, and
- have set aside emergency funds, according to the FINRA Foundation's study.
But be sure that your financial plan includes both short-term and long-term goals. Short-term goals help to prevent your long-term goals from feeling overwhelming.
3. Check Your Credit Report
Your credit score can impact nearly every aspect of your financial life, from how much interest you pay on your car loan or mortgage to the size of your credit line on a new credit card, the size of your security deposit for your apartment and even if you get that job you are aiming for. Take this opportunity to check out AnnualCreditReport.com, the only resource authorized by federal law to provide free credit reports from each of the three major credit bureaus—Equifax, TransUnion, and Experian. You can request one report from each of the credit bureaus—for FREE—once every 12 months.
4. Rebalance Your Portfolio
As the year comes to a close and you check the performance of your investments, you will likely find that your investment mix shifted throughout the year. If so, now might be a good time to rebalance. When you rebalance, you restore the asset allocation in your portfolio—the portion of your total portfolio you invest in different asset classes, like stocks, bonds, and cash or cash equivalents—to your original target, or adjust it to an allocation that best fits any revision you may have made to your investment objectives. The goal is to maintain your desired risk level, assuming your objectives have not changed, and to keep your portfolio diversified.
5. Free Yourself of Financial Clutter
Bills, mortgages, bank statements, brokerage statements, credit card statements—being an adult certainly does require a lot of paperwork. If you want to keep your paper trail under control, it's essential to develop a well-organized document-retention process and to "clean house" from time to time with a good shredding session. It's a good idea to get yourself reorganized at least once a year and to purge any unnecessary old bills or receipts. Bonus: if you take this step now, you'll be well prepared come tax season.
Source: The Alert Investor
You don't have to do this on your own. An independent financial advisor in DC can help you develop a financial management plan that is compatible with your budget, your current situation, and your lifestyle goals. 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 significant 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.