The beginning of a new year is a time to start fresh, make some changes and set some goals. Now is as good a time as any to evaluate your income, expenses and overall financial health and set some goals.
Here are a few things to look at when it comes to setting financial goals:
Retirement: Depending on your age, retirement can seem like a lifetime away, or it can be right around the corner. No matter your age, now is the time to look at what is available for retirement income, and if it is deemed to be not enough, now is the time to start saving towards that goal.
Insurance: get out your policies, health, life, auto, property, etc. Talk to your agent to see if you are appropriately covered.
Debt Reduction:Consolidate current debt and don’t create more- that means cutting up the credit cards and gaining control of spending.
Savings: Besides controlling spending, you’ll want to amass some savings; typically the interest rate on investments is considerably lower than the interest rate on your line of debt so by saving rather than paying down debt, you’re actually losing money. That’s where you need to strike a balance: you need to invest some, but at the same time reduce the debt.
Additional Income:Think about the possibility of getting a second part time job. If you’re living comfortably on your current income, the income from a second job can go directly on debt or mortgage or into retirement or another fund for education or a trip or an emergency.
Once you set your financial goals, it’s good to revisit them every few months. Six months from you will be motivated to continue your financial plan when you see how well it’s working for you!
The desire to “keep up with the Jones’s” has become more than a social status issue for many people. Also, it is very easy to get caught up in this during the holiday season. It has become a catalyst for overspending that has consumers running to banks and other lenders looking for ways to finance their purchases. This issue also has countless consumers loaded up with credit card debt so steep it may take them a lifetime to get out of it.
Give your financial literacy a good double-check, and if you are not already practicing the following financial practices, now is a great time to start today:
- Pay bills on time and balance your check book each month. You can’t know how much you can afford to spend if you don’t know how much you currently have to spend.
- Stop buying on impulse. If you want something, rather than charging it on your credit card and paying interest, save for the next few month and buy it when you have the money.
- Always pay more than your minimum balance on credit cards: Get rid of them as soon as possible. You will save money on interest and have more to save for the future.
- Vow to maintain only “good” debt. This is the type of debt that will increase your net worth: A mortgage on an affordable home, a car loan, or college debt. These will either increase your creditworthiness or make you more employable so you are able to earn more and keep debt to a minimum.
- Always include some savings in your budget. Many short-sighted people are unable to see their needs after retirement and don’t save. This results in financial difficulty during their declining years.
- Find out what you don’t know about finances—and learn it. Despite the flood of information on financial management, people don’t take the time to learn.
Finally, in order to put a stop to this financial madness keep in mind the media pull for spending and don’t be drawn into the hype. By being savvy shoppers and savers, the overspending and debt can stop.
Brian Denysuik, Owner of Creditaid, does budget work with Habitat for Humanity to help prepare applicants for potential home ownership. Brian recently met with a young lady, who had already developed some very good budgeting habits.
When discussing the importance of budgeting, she quickly pointed out how she was never taught this very important life skill. She proceeded to say the she was inspired by Gail Vaz-Oxlade, author of the best-selling Debt-Free Forever and host of the popular TV show Til Debt Do Us Part. Gail Vaz-Oxlade is having a lot of impact on people and will be in Winnipeg, on February 9, 2012 at Canad Inns Polo Park. Creditaid is very excited to be one of the sponsors of this event. Stay tuned for more information.