Financial targets are again at the forefront of your plans for the new year. There are of course other areas in your life you want to prioritize like losing weight and eating right. According to a Nielsen.com survey in 2015, people included their finances in the mix. Their resolution for the new year included spending less and saving more. It constituted about 25% of the consumers in the survey and came in fourth place.
People prioritized their health over others but their finances still belonged to the upper part of their list. This could be because a lot of areas in a person’s life is almost always connected with their finances. Their ability to lose weight means they have to eat right or go to the gym. Both of these needs a funding component such as gym memberships or shopping for healthy food alternatives.
Almost everything you do in life has a financial component tied into it directly or indirectly. This is why setting financial targets at the start of the year is an important step. For some, the put together a financial resolution list while others integrate it with a more comprehensive list. The important thing is that you have one.
Choosing to forego a financial list for the new year exposes you to unnecessary risk. This is completely avoidable if only you would find the time to sit down and go over a financial checklist. What makes this timely is the fact that you are starting a new year. To some extent, this means that you get a clean slate with your finances. You take with you what you learned in the past year and use them to make you a better person.
Here are a few things you can focus on this year when it comes to your new year financial goals
Household budget should be part of your financial targets
A staple in any financial management planning is a working household budget. This is one document you cannot do away without when you are serious about your finances. This gives you an idea of how you are managing your cash flow month on month. The idea is that your income needs to be greater than the expense. The money coming in should not only cover your existing expenses. It also has to address your future preparations. To get started in managing your budget, you simply need to list down all income and expenses. From there, you can already see if you have enough and where you can make adjustments if need be.
One of the most crucial funds you have to keep in mind when talking about financial targets is your reserve funds. This covers your emergency fund as well as your rainy day fund. Your reserve funds benefit your finances because it serves as a financial cushion in times of need. The emergency fund covers the bigger expenses and emergencies. This can come from medical emergencies or even job loss. The rainy day fund is meant to address small emergencies such as car battery replacement or even small house repairs. You need to identify how much you need for your reserve funds at the start of the year. This allows you to break the amount down to doable monthly targets. This is better than trying to come up with the fund in just a few month’s time.
When you talk about your future, your retirement fund would always be on top of the list. The one thing that makes this fund stronger is your ability to plan for it as early as possible. It also helps if you can max out your annual contribution year on year. According to IRS.gov, maximum 401(k) contribution for 2017 remains the same at $18,000. As you put together financial targets for the year, you need to keep two things in mind with your retirement fund. First is to get started with saving for it as early as possible. This gives you the chance to retire at an age that you like. It is also important to look for ways to max out your contribution to take advantage of compound interest.
As you look to strengthen your finances, one of the funds you have to keep a close eye on is your investment fund. This works in conjunction with your retirement fund in helping you prepare for the future. You can have investments using various financial tools such as stocks, bonds or even getting into a business with family and friends. The idea with investments is to find a good balance of risk and diversity. Risk will always be part of any investment options. You need to find your comfort level and know how much you are willing to lose to gain a profit.
One of the best ways to increase your productivity is to invest in yourself as well. If you have a career path then it would be a lot easier to look for ways to improve your craft. You can go back to school and take up post-graduate studies. There are also some courses you can take to polish up or simply get updated with industry news. Self-improvement can also mean physical well-being. Getting in an annual check-up to monitor your health can be a great idea as well. You get to be proactive in monitoring and addressing health needs.
It is important to have some time to unwind and relax because you need it to manage stress. This can probably be one of the most exciting aspects of your financial targets. Trying to determine what to give yourself for the year can make you feel ecstatic. You just have to make sure that your entertainment fund does not set you back with your finances. The idea is to inspire you to do better and not to deviate you away from your plans. There are a lot of consumers who falls into the trap of spending more on gifts for themselves compared to their savings goal.
This financial target requires a delicate balance of holding back on your wants. You might be tempted to buy that jewelry you have been looking at for the past year. However, it might cost more that what you have saved up for the last six months. You can start with a less-expensive piece and slowly work your way up to the most expensive ones in a few year’s time.
Money for charity
it is a good feeling to help others and share your success. It also has a positive impact on your finances with your tax applications. Time.com explains how important it would be to look at a non-profit’s 501(c)(3) status. This assures you that you are dealing with an organization that can help you deduct whatever amount you give against your taxes. You get to help people and you benefit from it financially as well.
There are a lot of financial targets that you can identify at the beginning of the year. Doing so would help you keep to your long term goals. The start of the year is a good time because you have a full 12 months to plan and put it together.