Sure-Fire Steps to Achieve Your Financial Goals
What are your financial aspirations for the coming year? Would you like
to pay off some high-interest debt? Step up your retirement savings? Set
aside enough for an exciting vacation? The Iowa Society of Certified Public
Accountants recommends that you take several wise steps to turn your
financial dreams into realistic goals.
Create a budget
It will be difficult to lower your debt or save for your future if you don’t
have a clear idea of your current finances and how you’re spending your
money. Whether you use a software program or a sheet of paper, set down what
you earn and what you spend. In the spending category, include regular items
such as rent or mortgage, car payments, and other outstanding loans. Next,
make accurate estimates about your variable expenses, such as food,
transportation, entertainment, and clothing. Try to include those easily
forgotten expenses, such as the price of takeout lunch at work or stopping
for a bottled water or coffee.
Look for red flags
Now that you’ve listed what you spend each month, consider problem areas. Do
you have a high-interest loan or credit card balance? Are you spending a lot
each month on take out meals or entertainment? Think about whether you can
make better choices. Just because you can afford certain expenses, that
doesn’t mean you are making the best use of your money. If you change bad
spending habits or poor choices, you can preserve your cash and use it more
wisely.
Make savings automatic
We all know that saving something each week is a good idea, but we can
easily forget to do it. That’s why it’s a good idea to enroll in an
automatic savings plan at your bank or a 401(k) plan through your employer.
Remember that you don’t have to settle for a low-interest savings account.
Some mutual funds accept initial deposits of as little as $50 or will even
waive the deposit requirement if you agree to save a certain amount each
month. Many people aim to save whatever remains at the end of each month but
find that there’s little left. When you designate an amount for automatic
savings, it becomes a part of your regular budget and can’t be forgotten.
Choose realistic targets
Paying off all of your debt is an excellent goal, but it may not be
something you can accomplish this year. That’s no reason to give up,
however. You can make great progress if you set reasonable targets that are
achievable and that will also make a difference in your financial life. If
you resolve to reduce your debt by 25% this year, for example, you might be
in a better position to make a meaningful, positive change in your financial
situation and gain the satisfaction of accomplishing a goal.
Monitor your progress
Your aspirations and your financial situation may change as the months go
by. As a result, review your goals and your progress toward them at least
every six months to see how successful you have been and if
you need to make changes in your targets, your savings rate, or any other
factors.
Ask your CPA for advice
You can achieve your dreams if you understand where you stand now, chart a
course toward your goals and take the necessary steps to get there. For
these and any other financial issues, be sure to consult your CPA. CPAs have
the expertise you need to put your financial picture in focus.
Access “Find a CPA.”
