Five Financial New Year’s Resolutions to Keep This Year
At the beginning of each new year, many people make a list of resolutions
to keep in the coming months, such as losing weight or learning a new skill.
As you make your list, don’t forget to consider wise financial goals for the
year ahead. The Iowa Society of Certified Public Accountants suggests you
adopt these smart resolutions.
Save More
It sounds simple but people often forget or make excuses that prevent them
from setting aside more money for the long term. That’s why it’s a good idea
to make the process automatic. One way to do that is have your bank deposit
a certain amount of your payroll check or checking account balance into a
savings account each month. Even if you start by setting aside a very small
amount, you’ll be surprised at how quickly it adds up. And no matter what
your age, don’t forget that it’s never too early to begin saving for
retirement.
Watch Your Spending
This is another area where people have great intentions that often don’t get
carried out. One way to motivate yourself to take this goal more seriously
is to keep a list of everything you spend each month. Categorize the items
in areas such as groceries, restaurant meals and takeout, entertainment,
commuting, and gasoline–or whatever categories apply. Once again you may be
surprised this time at how much you are spending in certain areas. Are your
takeout expenses much higher than you thought? Are you spending a lot on gas
when public transportation could be a cheaper option? When you set down your
outlays on paper, you may find yourself much more motivated to change your
habits.
Keep a Budget
Once you write down your expenses, you can use them as part of a monthly
budget. A budget is an excellent tool for making sense of your financial
life and identifying where change is needed. Add up what you receive in your
pay checks each month and any other income, then deduct your regular
expenses, such as rental or mortgage payments, utilities, groceries, and
savings. You can use what’s left for restaurants and entertainment, travel,
or other discretionary purchases. But it’s smart to know how much you have
to spend before you take out your credit card.
Make Your Own Financial Statement
How much are you worth? The beginning of the year is a good time to find
out, since understanding where you stand financially can help you make
decisions about your future. The process is simple: Add up the value of what
you own, including the equity you have in your home or any other property
and the amount in your savings, investment, or retirement accounts. Then
calculate your debts, including your total outstanding mortgage balance,
auto loans, student loans, and credit card balances. If your assets are
greater than your debts, then the excess amount is your net worth. If your
debts add up to more than your assets, it’s a good idea to give some thought
to your debt management plan and your spending habits. Is it time to make
some revisions in how you manage your money? If the answer is yes, consider
new steps to take during the coming year.
Consult Your CPA
As you review your financial situation and chart your future plans, remember
that your local CPA can help. He or she can offer the advice and information
you need to make smart financial decisions. If you are looking for a CPA, go to
www.findanIowaCPA.com.
