The Financial Reset Button





 Where are you with your New Year's Resolution for your Financial Goals?

 

As the end of the first month of the new year approaches, it becomes important to keep your promises to become more financially sound and always develop your action plan to increase your net worth.

In order for your plan to be effective you must be ready to be honest about your spending habits, create realistic goals, and remember to not make any excuses for yourself. Now is the perfect time to reflect on past spending and saving habits and be ready to be a part of the Un-Broke Women around the world! Here are a few tips to help you create successful personal financial goals for 2016.

1) Review 2015 spending habits

An effective method for setting your 2016 goals is to reflect on ​what you spent your money on last year. Derek Coburn, a partner at Washington Financial Group, recommends taking a look at your 2015 credit card and bank statements and identifying the three purchases that you feel best about and the three purchases that you regret most. According to Coburn, this exercise helps people make better decisions on future purchases and set more realistic financial goals. Coburn adds: “In hindsight, hardly anyone ever feels good about the money they spent on material goods and physical things. They almost always feel good about the experiences they purchased.”

2) Create a 2016 personal budget

Once you have reviewed your 2015 spending habits, creating your budget for this year will be easier. According to financial adviser Tahir Johnson, “Many people avoid creating a budget because they think its only purpose is to limit spending, but that is not the case. By keeping tabs on your income and expenses (both essential and discretionary), you not only gain a better understanding of where your money is going but it also helps you to formulate a plan on how you can save and invest in the future.”

3) Stay organized

One of the most effective ways to maintain your personal finance goals is to stay on top of your expenses, spending and taxes throughout the year. Organize your expenses by using apps such as Mint ​and Level Money or more traditional tools such as Excel or a spending notebook to create budgets, manage money and pay bills all in one place. For any income you plan to earn this year from a side job, such as freelance consulting, driving an Uber or hosting on Airbnb, set aside a portion to meet your income tax obligations. Apps such as Hurdlr automatically manage this for you and help minimize these monetary commitments.

4) Create a vision

Developing an annual budget and tracking monthly expenses is only half of your financial equation. You also want to look at the larger picture and create financial goals that are in line with your long-term vision. Creating a financial vision board is an easy, effective method to lay out your short-term priorities and uncover your larger financial goals. All you need is a poster board, scissors, magazines and glue. You could cut out phrases and pictures that represent your short- and long-term financial goals (i.e. pictures of a new house or your dream vacation destination, phrases such as “no debt,” specific numbers that you are trying to reach) and paste these images onto your poster board. After you have created your vision board, you may need to alter your budget to save toward your long-term vision, or you may find the extra motivation to stick to your budget in order to achieve that long-term financial dream.

5) Set specific milestones

Many of us will make lofty goals for the new year, but few of us will actually stick to them as the year progresses. It is not enough to create a budget or a financial vision — you have to follow it through! Set goals for specific milestones throughout the year so that you have a way to measure how you are progressing against your plan. For example, if your goal is to build up an emergency fund, decide how much money you want to have saved by three, six and nine months. Then check in at each of these points in time to confirm that you have hit your target savings and adjust accordingly to reach your ultimate goal.
Use the above tips to set your financial goals, write these goals down, and refer to these goals and your vision board often throughout the year.

Do you need assistance, or someone to help you with your financial overview? Send me an email and let's achieve your financial goals together!  

Research provided by Anjali Varma of the Washington Post.

Wishing well

Have you contributed to this?

I had to share this picture from the Lewis Ginter Botanical Gardens. I found it so important to share that I decided to put it on the blog, and not just have a couple of lines about it on Facebook.

You may wonder what is so important about this picture…. Well, it is just another wishing well. (Excuse the pun!) But it made ME wonder what people are thinking to just be throwing money in this little pool of water created for decorative purposes.

Looking at the coins resting at the bottom of this little decorative waterfall, I had to wonder how many “wishes” (meaning coins) collect there over the course of the year… and then, also wonder how many of those wishes are money-related, i.e. pay off debt, save for a vacation, buy a new house, buy a new car, etc. Has any of the wishers considered saving that penny, or nickel, or dime, or quarter and put it toward achieving that goal?

Some of you might know the story of the penny that doubles every day for 30 days… I guess the people how throw money way like this, don’t know it. I know you are going to say that nobody nowadays will double your money daily and make you a millionaire in 30 days. You are probably right. But you also have to agree that if you keep your money instead of literally throwing it away, you have more chances or multiplying it. And if a penny won’t make you a millionaire, no problem. Keep your penny, and find some friends for it – in your piggy bank, in your pocket or in your bank account. You will be richer with all your money rather than just some of it, won’t you?

This is not a way of saying you should not give, or help others, by any means. This is just my way of saying that you can and should do what you want with your money – as long as your decisions are wise, and well thought out. And if your choice is to support Lewis Ginter Botanical Gardens, I will commend you on a wise decision. Give them a donation (from your bank account, tax deductible) and not the change in your pocket thrown in the wishing well.

Another thought that came to mind was the example that we set for the children when we teach them it is OK to throw money away, and that it will bring us more money and more of what we want. What will they think, and how is that going to impact their future?  

New Year Resolution

Where is your money going?

Is getting out of debt one of your goals this year? Or maybe you resolved to lose weight – again… Well, if that is the case, you sure are not the only one. Weight loss and paying off debt are resolutions most people make at the beginning of each year. And then, less than a month later, they get back to old habits and forget to pursue their goals.

If that sounds like you in previous years, maybe you can make a difference in 2016. And here is an idea about getting out of debt: track your spending. I know you think it is tedious and boring, I know it takes time to do, and I know you think you are tracking everything on your credit card statement. The good news is that you already have a centralized place to get the info you need. The bad news is that the credit card statement is not a good tracker for you.

Still, budgeting and lowering your spending are still the best solutions for getting your debt reduced, and later eliminated, tracking expenses is the only way to go. But to make it easier, you have the option of only tracking what you spend eating out. Even though most people don’t realize, that is one of the larger monthly bills – and one that can be lowered quite easily, if you are determined. If you are one of those people who must have Starbucks every day, maybe you should look at your monthly total. You may have a sticker shock! Motivate yourself to cut down by saving the money for a bigger ticket item that you really want – that way you own the item out right, and don’t pay for it with a credit card.

Working just to pay bills is no fun at all! And it definitely is no motivation! So if you want to keep your budget under control, make it a goal to have fun traveling while paying upfront, or own something you like that you pay in cash for, or have an experience you enjoy that is paid for with cash, not credit card.

Sounds like a lot of work? Well so is worrying about where the money is going to come from to pay the credit cards off. And so is dodging calls from bill collectors. So maybe you can resolve to dedicate this year to tracking expenses, and reducing them. It’s only short-term hard work.