Some of the most common New Year's resolutions have to do with fitness and finances. This is no surprise, as a new year can be a great time to hit the reset button. But, the most important piece of any change is being willing to stick to it for the long run, not just for a couple of weeks. Having the discipline to accomplish this is half of the battle. Here are 5 tips to help you boost your finances as we kick off the new year.
1. Create a budget and track your expenses.
Before you can get to where you want to be, you need to know where you are right now. That means knowing where your money is being spent each month and how much extra room you have to commit to your financial plan. Without accomplishing this step first, you really have no idea what is going on with your current plan.
2. Know what you owe.
How much of your monthly liabilities are tied to debt? Part of getting your plan on track is going to be making sure that your debt load is manageable. A lot of experts out there say that your total debt should be no more than 36% of your total monthly income with around 28% of this attributed to the cost of owning a home.
3. Check up on your portfolio.
When it comes to investments, one of the top things to do is to check up on your portfolio and how it did last year. At the same time, look at the current economic environment and determine the best mix of investments for the year ahead.
4. Prepare for emergencies.
It seems like just about every year something pops up that we weren’t planning on. Sometimes it is something minor, but other times, it can be a major expense. Having funds set aside to be able to cover these is a must in order to protect the rest of your financial plan and not blow it up. In other words, be prepared for the unexpected because it will happen.
5. Clean up your estate plan.
This is often something that gets missed in a financial plan. But, it is something simple that everyone should do at least once a year. A simple way to do this (although grim) is to think, “If something were to happen to me, would it be easy for my family to get everything settled and be taken care of?” If the answer is no, there are probably a few things to review.
Although it can seem daunting, it’s also important to remember that not everything has to be completed at once. Create a priority list of the most important things and start knocking them out one at a time. Before you know it you will have the plan in place that you want. The most important thing is to remember to stick to it and create progress that you can build upon each year.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Myles Zueger and not necessarily those of Raymond James.