Your Financial Future: Take small steps to achieve financial goals
Most people are happy that 2020 has ended. It was a year like no other we have experienced.
It created large structural changes to the economy like never before. No one is sure exactly what the total impact will be. We must be ready for whatever happens.
Many people discovered that they were not as financially prepared as they should have been. Some did not have enough emergency money and had to depend on food banks to feed their families. Others had too much debt or did not have estate plans in force to deal with all of the emerging issues.
At the beginning of a new year, many people make resolutions about changes they hope to make to improve areas of their lives. Most of these grand ideas are abandoned before the end of January. Good intentions without follow through have no value.
New Year蘑菇视频 resolutions are usually not successful because they are too big and staying motivated for twelve months is a long time. There may be a way you can make changes to your financial life if that is your goal.
First, you have to decide: what is your why? This means why do you want to make these financial changes? Will it make retirement more enjoyable? Life less stressful? Whatever it is, if you can mentally picture in your brain the benefits of accomplishing this change, you are more likely to stick to them. This helps you see the value for any sacrifices you must make.
Next, pick one area to concentrate on, not making many changes at once. Once you have determined your starting point commit to a 30-day challenge to that goal. You can often accomplish this in 15 minutes per day. For instance, if your goal is to save more emergency money, what could you do? Keep a journal of all the money you spend each day. Many people do not understand where all of their money goes each month. Carrying a small notebook makes it easy to record your expenditures.
After a couple of weeks, decide where money is being spent that is not necessary. These funds can be redirected to a savings account. If you save $20 per week, you will have $1,000 saved at the end of a year. Emergency money has to be kept in something such as bank accounts where it is available at a moment蘑菇视频 notice when needed. It will not earn much interest, but that is okay for some of your money.
While having an emergency account at the bank is important, having too much money sitting in the bank, with our record low interest rates, could be a poor financial decision. Five year CDs are paying less than 1% interest at many financial institutions. There may be other safe options to earn more. Liquidity is important, but having too much can be expensive.
Improving your finances will take a little work. Albert Einstein once said, 鈥淥nly a fool would think you can keep doing the same thing and get different results.鈥� You can do this. Next week we will discuss some other little thing you can do to improve your financial life.
Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, 鈥淵our Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.鈥� If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.