What are your financial goals for the next year? Would you like to pay off high-interest debt? Increase your retirement savings? Set aside enough money for an exciting vacation? Below are several steps you can take to make your financial dreams a reality.
Create a Budget
It will be difficult to lower your debt or save for the future if you do not have a clear understanding of your current finances and how you are spending money. Whether you use a software program or a sheet of paper, record what you earn and what you spend. In the spending category, include regular items such as rent or mortgage, car payments and other outstanding loans. Next, make accurate estimates about your variable expenses such as food, transportation, entertainment and clothing. Include those easily forgotten expenses such as the price of lunch at work or stopping for a bottled water or coffee.
Look for Red Flags
Now that you have listed what you spend each month, consider problem areas. Do you have a high-interest loan or credit card balance? Are you spending a quite a bit of money each month on takeout meals and entertainment? Consider whether you can make better choices. Just because you can afford certain expenses that does not mean you are making the best use of your money. If you change bad spending habits, you can preserve your cash and use it more wisely.
Make Savings Automatic
We all know that saving something each week is a good idea, but we can easily forget to do it. That is why it is a good idea to enroll in an automatic savings plan at your bank or a 401(k) plan through your employer. Remember that you do not need to settle for a low-interest savings account. Some mutual funds accept initial deposits of as little as $50 or waive the deposit requirement if you agree to save a certain amount each month. Many people save whatever remains at the end of each month but find that there is little left. When you designate an amount of automatic savings, it becomes a part of your regular budget without fail.
Choose Realistic Targets
Paying off all of your debt is an excellent goal, but it may not be something you can accomplish this year. However, you can make great progress if you set reasonable targets that are achievable and make a difference in your financial life. If you resolve to reduce your debt by 25 percent this year, you might be in a better position to make a meaningful, positive change in your financial situation and gain the satisfaction of accomplishing a goal.
Monitor Your Progress
Your aspirations and your financial situation may change as months go by. As a result, review your goals and your progress toward them at least every six months to see how successful you have been and if you need to make changes in your target goals, your savings rate or any other factors.
You can achieve your dreams if you understand your financial standing. Chart a course toward your goals and take the necessary steps to reach them.
The Walz Group has the expertise you need to put your financial picture in focus. Contact us today.