As New Year's Eve approaches, I hear more people making resolutions about their gym memberships and careers than about handling their money in the coming year. Maybe that's because people don't know where to start.
The Allianz Life Insurance Company of North America's annual New Year's resolutions survey for 2014 reported that 49 percent of respondents said that health and wellness were their first priorities for the coming year, up from 43 percent in 2013. Only 30 percent ranked financial stability as their top goal for the year.
In 2016, make realistic goals and consider creating an annual financial calendar that helps you stick to them. Here are some key calendar items to set and execute:
Set three important money goals for the year. Three money goals may not sound like a lot, but if you've never thought about money goals before, establishing these targets can make a major difference in your financial life. Set goals that address key money concerns or serve as a springboard for a solid financial future. Choose what makes sense for you, but if you need suggestions, here are three of the most important basic financial goals:
• Create or reset your budget. If you've never made a budget before, spend a month or two tracking everything you spend. Review your findings closely and determine whether you're spending less than you're earning and using those funds to meet key goals. If not, see if there are any spending areas you can cut. Write down those limits and stick to them.
• Build an emergency fund. An emergency fund contains between three to six months of living expenses you can draw upon only in a real financial emergency - unemployment, illness or a major unplanned expense.
• Save for a reward. Make one of your three goals a fun goal - a vacation, a new bike, a wardrobe upgrade - something that feels like a treat.
Total up the money needed to achieve goals with a dollar amount and schedule days on your calendar that you will either deposit money or make payments to reach those goals.
Mark the dates for your three free credit reports. It is best to schedule receipt of your three free credit reports from Experian, TransUnion and Equifax at different points in the year so you can keep a steady eye on your credit and spot irregularities if they happen.
Set and schedule major home projects. Is your car, a furnace, a roof or some other major household structure or appliance getting close to a replacement date? Start planning for your new acquisition by marking a reasonable replacement date on your calendar. Then evaluate both cost and applicable labor for that goal and determine the best way to set aside funds in advance. You may want to consider adding a little money over time to your emergency fund to handle such goals so you'll have cash available.
Review your investment allocations for retirement and other financial goals. Consider reviewing your holdings in retirement or investment accounts once a year to make sure they're still performing as you've planned. If you work with a qualified financial planner or tax professional, talk to them about the right date or dates to check in and discuss your choices. Regular discussions help you keep an eye on such goals and make sure you're still on target.
Mark key dates for raises and open enrollment. If you're getting a raise this year, mark the date it kicks in so you can adjust your budget. Also, many employers schedule open enrollment for health insurance and other benefits in the fall, so give yourself enough time to evaluate your current options and see if you need to make changes for the coming year.
Note insurance renewal dates. If you're not comparison-shopping for the auto, homeowners or health insurance coverage you buy on your own, there's a good possibility you're losing out on money, service or coverage. Review all your renewal dates, count back two months and put a date on the calendar to start contacting agents to review your current policies so you can make sure you're getting the most coverage for your money.
Schedule midyear and year-end financial reviews. Schedule time in June and November to see how you're doing with budget, savings, spending, investment and tax issues. The June date is for corrective actions; the November date is to determine the spending, savings or tax moves you want to make before December 31 and to set financial goals for the New Year. If you work with a qualified financial or tax expert, consider involving him or her in the conversation.
Set the date...and then automate. If you know you need to deposit certain amounts to various savings, investment and checking accounts every Friday, why not make that process as easy as possible? Sign up for automatic withdrawal to all key retirement accounts at work and automatic deposits to personal accounts every payday. It's hard to spend money you don't see.
Bottom line: The key to a better financial life may be as close as the calendar you keep on your wall, your computer or smartphone. Assigning actual dates to your spending, savings, investing and planning decisions will make sure important money decisions are always on your "to-do" list.
Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney
This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.
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