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How to Get 2010 Off to a Great Financial
Start
Plenty of people make resolutions to lose weight, get a new
job or make other things happen in their personal life, but
relatively few make solid resolutions about money. Make 2010 the
year you'll live a better life financially. Here are a few
resolutions to think about:
Write down the things you really want in life. Have
you ever written down the big things you want in life? Granted,
all great dreams don't cost money, but many of them do. Money
buys freedom — to travel, to retire early, to start a business,
to change careers. Putting goals in writing gives them a
formality and a starting point for the planning you must do.
Evaluate your risk tolerance. One of the most
beneficial things financial planners do is help you articulate
your financial goals and establish (or re-establish) your
tolerance for risk. With the recent recession and market
turbulence, many individuals would benefit from an analysis of
how much risk they want (or need) to take based on what they
want to achieve with their money.
Track your spending. If you haven't purchased
financial accounting software or set up a reliable accounting
method of your own, this is the year to do it. Diligent expense
tracking is the first critical step to getting personal finances
in order whether you do it on paper or on your computer.
Mint.com or QuickenOnline.com are free online programs that help
you do this.
Get tax and planning advice toward retirement, other
goals. Maybe you've always winged it with your taxes and
considered your company 401(k) the ticket to your financial
future. Chances are your planning is inadequate. Start getting
references on good tax professionals and consider sitting down
with a CERTIFIED FINANCIAL PLANNER™ professional to discuss
your whole financial picture.
Cut your debt. If you can't ever seem to get yourself
completely out of credit card debt, make this the year to do it.
Take inventory of your balances, figure out if you can
consolidate them under your lowest-rate card, and resolve to pay
off an amount that exceeds the minimum — on time, every month.
And if you can pay extra toward mortgage, auto, student or other
borrowings, do so.
Start saving — or save more. If you haven't signed
up for your employer's 401(k) plan or begun a savings plan
tailored for the self-employed, this is the year. And resolve to
save at least 5-10 percent of your take-home pay based on your
cash flow, and place the maximum amount in your retirement plans
and savings.
Invest in yourself. If going back to college or taking
specific coursework will help you advance in your career, plan
to do it. If investing in a health club membership that you
actually use makes sense for your health as well as your
insurance costs, do it. Keep in mind that bettering yourself is
always a good investment.
Redefine the way you shop. If you're an impulse
shopper, break the habit in 2010. As a suggestion, get a legal
pad and make that your centralized shopping list — use a single
page for groceries, stock-up goods (it's wise to start buying
essentials in bulk if you can measure the savings), essential
clothing or big expenditures you'll need to make at specific
times. Taking that pad with you wherever you spend money is a
good way to keep a grip on your wallet as long as you don't
stray from the list.
Change the way you commute. If driving is the single
best option to getting to work or other destinations, it's tough
to make that switch. But if you have the option to leave the car
in the garage at least one day a week and walk, bike, carpool or
take public transportation instead, try it. You'll save money on
gas, maintenance, insurance and parking costs, you'll benefit
the environment and in the case of walking or biking, the
exercise may do you good.
Cut unnecessary expenses. Do you really need deluxe
cable? How much are you paying for your Internet service? Can
you wear a sweater around the house and lower the thermostat? In
every budget, there are items that can be cut — or at least
trimmed. Take a hard look at all your "essentials" to
see how essential they really are. Aim for a target of at least
10 percent and start setting that money aside on a regular
basis.
January 2010 — This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
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