Coming into a New Year, many create great New Year’s Resolutions, this year in conversations I have heard more resolutions than ever in the past! It is unfortunate to see studies show that as many as 80% of these resolutions fail and many do by February. Naturally, being a financial advisor – Financial New Year’s Resolutions have been top of mind at our firm. There is such a large connection between financial health and your overall wellbeing. Implicit stress by not having control over your finances or knowing where things are at can permeate into the rest of your life. Here are some quick tips to get things into gear for this year if you have not started on the financial goals, or ideas to keep that momentum going!
Write Down Where You Are At
Two of the most important documents to start with are a personal balance sheet and a personal income/expense sheet. The balance sheet can do a great job of taking inventory of all of your accounts such as 401k’s, IRA’s, checking, savings or other brokerage accounts. Many times it is easy to put off checking these balances or it can be easy to forget about a past 401k. The Income Statement will show how much you are making from all sources and what you are spending those dollars on. It is helpful to see if certain bills or expenses are getting too large and need to be scaled back.
After you have written everything down, it is important to write down what your goals actually are. An old Harvard study did a great job articulating this and showing that having clear concise written goals vs just having them in your mind gave you a large edge in actually achieving your goals. There may be a lot of factors behind this data but writing them down can be a great place to start in actually making progress towards your goals.
The next step is to truly take action on these goals. If the goal is financial freedom and retiring earlier – work to establish more savings. Many types of accounts can have this done systematically from your bank account. Or if you were fortunate to get a raise or bonus coming into this year, you could turn around and invest those proceeds right away through a brokerage account or increasing your 401k contributions.
The key to all of this is that there is never an end stage to financial planning; it is constantly evolving as life is dynamic so make sure to continually review all of these goals and objectives. This can be done by looking at your budget monthly and looking at your investment statements to make sure you are in the know for what is going on. The great news with all of this is that you never have to do it on your own. From new technology platforms online to help track where you are currently at, to financial advisors that can serve as a coach and assist you with these goals, there are many great options available.
Best of Luck with your 2021 Goals!