Happy New Year! This fresh start is a great time to set your goals for the upcoming year. Here are some ideas for resolutions, of course related to your finances, to get you started off on the right foot in 2019!
Write Down Your Goals
Start by brainstorming for a few minutes. Where would you like to see yourself financially in one, five or even twenty years from now? Think about this time next year. What has to have happened from now until then for you to be excited about your progress? Think about what’s most important to you. If you’re married, make sure to include your spouse in this exercise. As you come up with ideas for goals, write them all down.
Once you have a good list, scan through and circle the three most important goals. For each of the three goals you’ve identified, make a list of actions you must take to achieve the goal.
Now take your list of three goals and action items and post them in three places you’ll see every single day. Tell a friend and ask them to check in on your progress. You could even create a reward that occurs if you hit all the goals. The gist is you want to create an environment that increases your chances of hitting those goals.
Track Your Net Worth
Net worth equals assets minus liabilities. It’s a snapshot in time showing the current value of debts you owe, assets you own, and the net of the two. By tracking it over time, you’ll feel more organized and aware. You’ll notice things you never paid attention to before, like car depreciation and investment performance. When tracked over time, net worth updates become like a financial journal showing all the ups and the downs. If you’re looking to gain control over over your money this year, start by tracking your net worth.
In preparation for tracking, load up all your online accounts onto an aggregator. This will become your go-to spot for updates on all your balances which should save you time and help you get organized. If you’re working with us, you can use your client website for this. This should only take you a few minutes to update each month. Set a calendar reminder or appointment for the same time each month to update your net worth for the prior month. It’ll begin to become a great barometer of your financial wellness.
Give Away Extra Stuff
People today tend to have houses loaded up with unused stuff. Think about how nice it would be to live only with the stuff you actually use. And, sadly, there are plenty of people out there who are in desperate need of the things we never use.
Start the year off by giving your extra stuff to other people. You’ll realize the benefits of having a less cluttered home while also helping out others that actually need it. In addition, you’ll receive a nice tax deduction for the value of the donation.
Make sure to document exactly what you donate for tax purposes. Many organizations provide you with receipts to document your donation. Run the idea by your tax advisor for their input. In some cases, donations in one year vs. the other can make a big difference in benefit.
Cut Wasteful Spending
If you’re not already tracking expenses, pull up your bank and credit card statements from last month. Typically your bank website allows for transaction downloads into an excel spreadsheet format. This is super helpful because once in a spreadsheet, it’s simple to sort however you’d like.
One you have all your transactions for the prior month listed, go through the list one by one. As you go through the list, highlight line items that are the least important. Now take your highlighted spending and come up with a specific plan to eliminate each expense ASAP. It works best if you can go ahead and plan for where you’ll redirect the money so that you can be intentional with the freed up cash flow.
Get Organized By Going Paperless
Keeping up with your personal finances can be a chore. Some accounts load you up with paper while others are all electronic. Wouldn’t it be easier if your personal finances were completely paperless and stored in an organized online filing system? With today’s technology, it’s totally possible. But like switching to any paperless system, it takes some front end work to get it right.
First, come up with a system for storing your financial information. You could use a cloud-based storage provider like Dropbox or go old school and store it all on your own computer. Either way, think of it like your online filing cabinet. Get your e-files in order from the start by creating folders to store your various categories of documents. Use your existing paper filing system to remind you of the necessary categories.
Next, log into each account and request paperless delivery of statements. As you receive the email notifications of new statements, you can decide if it’s important enough to save into your e-filing system. If you’re really into making this easy, you could automate the whole process using a system like Zapier. This tool will screen all your emails and look for pre-set addresses or subject lines, and you can automatically direct those into a folder in your online file sharing system. It’s pretty slick.
As you update or prepare new documents, like tax returns and estate documents, remember to request PDF copies so you can store those electronically.
Unfortunately, it’s impossible to avoid ALL paper – so we have a solution! Download a scanner app on your iPhone (like Genus Scan) and scan important documents directly into your online file system in seconds.
The key is to strike when the iron is hot. If you like the idea of one of these, take action now to get the ball rolling. Good luck kick-starting 2019!
Have questions or care to share your experience? Ask/share in the comments!
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