New Year’s… a new start.
The beginning of a new year is always a wonderful opportunity to reassess different areas of our lives. To see how things are going now based on looking back at the choices we’ve made over the last year. This is true especially with your money and financial goals…
How’d you do?
We can usually see that we’ve made some good choices, and some… well … could have been better.
The one big thing that we can both attest to… if you are reading this… is that you are still alive!
That is great news! You still have time to make new changes, adjust to what didn’t work well, and move forward in a new direction.
The really exciting part here is that the only thing we can always count on is change. If you want to change your finances, you absolutely can.
You only need to:
- Make the decision to do it
- Identify the steps necessary to work toward the changes you want
- Actually take the steps consistently
- Don’t give up!
- Adjust where needed
- Be patient!
- Watch the changes happen over time.
It’s pretty damn exciting to watch. I’ve seen it in my own life and in the lives of many, many others.
Since we all come from different places money-wise: no income, huge income, no debt, huge debt, etc… We all have different issues that need to be addressed.
Here are some of the basics of what to look at when reviewing your finances:
1) Emergency funds. In order to have peace of mind financially, savings that can cover 6 to 12 months of all of your living expenses should be in place-at minimum. If you are in a place that you are not able to save at all, then thinking outside the box to be creative on how to resolve this is necessary.
2) Pay off credit card debt. The worst part of credit cards is they are pushing for you to spend. And why wouldn’t they? The average interest rate on a credit card now is a whopping 16%! If you have bad credit-it can go upward of 30%! Get rid of the debt. If you have too much debt, you’re most likely spending beyond your means and need to get a handle on why you’re overspending and how you can resolve this. If you are unemployed and have no other options than to use the card… I get that. I would suggest, as I did above, to think outside the box to create positive financial change.
3) Get rid of monthly charges you don’t use. Let’s face it, a subscription to a local gym for $9 a month seems cheap, right? If you are actively using it… then yes, it’s a steal. If you’re not, go right now and take $9 cash out of your wallet and rip it up. You wouldn’t, right? Right. Go over all of your credit card and debit card automatic withdrawals and get rid of the ones you do not use… It’ll save you a bundle.
4) Track all of your spending. As discussed in an earlier blog on budgets… tracking (or not tracking) can be the difference between financial health or ruin. Tracking what you earn and what and how you spend will be a financial life changer. There are a lot of great apps out there that can help you organize your financial life.
5) Pay your bills on time. Like the monthly recurring charges we don’t use, the late fees and interest on overdue bills are just a waste of money. That $39 late fee… no big deal, right? Like the gym membership… I’d like you to go to your wallet-take out $39 cash and rip it up. No? Then get those bills paid on time. Make your payments automatic-it’ll be a time and money saver.
6) Make a savings/ investment strategy plan. This is part of budget planning… when we know what we earn and spend, we can make decisions not only on where to cut but also in the spending-we can decide how much to save and where to save it. This step often requires an investment person to help you decide where to invest your money and what risk level you can tolerate. If your savings are beginning to grow, outside investment professionals are vital. Going it alone on investments can have disastrous results.
7) Retirement savings. Most people are unprepared and have undersaved for retirement. Scary, isn’t it? If you are one of those who doesn’t feel prepared… make an appointment with an investment advisor and start a plan. If you’ve got retirement in place, it’s always good to review the financial investment health of the yearly plan with your financial advisor. Here’s a link tool from Nerd Wallet to see how you are doing with retirement:
https://www.nerdwallet.com/investing/retirement-calculator
8) Charitable giving. They say if you want to see what people care about, look at their checkbook. I’d add, if you want to see what people really care about-look at how and to whom they donate their money. Giving to charities and causes that you believe in, and perhaps are passionate about, can be part of your overall plan… and this can be made automatic too. Don’t have much money? Give $10 a month automatically. If a million do just that, imagine the impact that can have. Giving back in whatever amounts we can is always a good thing.
Warren Buffett says: “First, my pledge: More than 99% of my wealth will go to philanthropy during my lifetime or at death. Measured by dollars, this commitment is large. In a comparative sense, though, many individuals give more to others every day.”
In my next blog, I’ll be talking about getting support-the difference between financial coaches (like me) and financial investment advisors.
