When determining resolutions for a brand new year, finances are often top-of-mind for many. But how exactly do you determine the best strategy for successful financial planning? While there are many routes to choose from, we’ve narrowed down some of our favorites to get you started.
Step #1: Evaluate where you are.
Start by taking a step back and evaluating your current assets and liabilities. This includes everything from your stock portfolio to your auto loan. This first step is crucial to lay the foundation for all of your plans!
Step #2: Design a budget.
Determining where your income goes is the first step in controlling your finances. Paying bills right after receiving your paycheck can be one of the easiest places to start! It’s important to also calculate where you can cut back additional spending. Maybe you’re paying for a subscription you haven’t used in several months? Cut it out and save yourself some extra $$$
Step #3: Pay off some debt.
Devise a plan where you can pay down some of your debts within a couple of years and steadily pay off your long-term debt. Setting a goal for yourself can help tremendously. For example, put yourself on a mission to pay off 20% of your credit card bill by July.
Step #4: Start an Emergency Fund.
We’re not just talking piggy banks. If you are able, set aside between one and three months of your income so you’re prepared when an emergency situation (like a natural disaster or sudden unemployment) arises. If you already have an emergency fund, try adding another month’s salary to it!
Step #5: Plan for retirement.
Though you may be a long way from retirement, it’s still never too early to begin planning. Review your life goals and what financial state you want to be in by the age of 65, and consider strategizing with someone else for additional expertise. Financial planners can be a great tool to help you prepare.
Step #6: Analyze your investments.
From your stocks and bonds to properties and business investments, keep close watch on the activity of your financial investments. If you’re using a third-party advisor, they might be cutting you short on profits. Regularly sit down to evaluate those funds.
Being mindful of where your money goes is the key to financial success. Make a commitment to yourself by setting these goals, and then thank yourself in January 2020. You’ll be glad you did!