Getting Your Financial House in Order for 2016
In keeping with my word of the year, “relationships,” January has been the month to focus on our relationship with money. I’ve covered the question of who and how much to tip, and discussed the topic of greed in the movie, The Big Short. Now a more personal question arises, do I have goals in place for 2016 that include a financial checkup? The first of the year is a great time to revamp, revisit or start our financial organizing. Here are a few tips from my friend, Cindy Goldman, on how we can begin getting our financial house in order.
It Starts With a Written Budget
According to Cindy, who has a degree in both Economics and Accounting, “Whether you are just starting out or nearing retirement, you need a road map on where you are and where you want to be. Your budget is your road map. It enables you to see where your money is actually going and helps you to accomplish your goals.”
The first goal is to just get started! Getting started with your financial “house” is similar to organizing your home or doing some spring cleaning. Although it may seem daunting, the results are worth it, even if it’s a job you dread tackling. Spring cleaning and organizing gives us a renewed feeling, motivation and a sense of accomplishment. And, so it is with your “financial” house cleaning and organizing.
Getting Your Financial House In Order
In much the same way that you don’t begin spring cleaning and stop before you’re finished, it is best to stay on top of your finances, so things don’t become cluttered and disorganized. Cindy suggests these few questions to ask yourself to keep a check on your financial house.
- Do I have a detailed written budget that I stick to?
- Credit card debt is expensive and is a flag that you might be living beyond your means. Strive to become free of all credit card debt.
- Do I review my credit report annually? You can receive up to three free annual credit reports. This is your financial report card to the world and very important to monitor.
- Do I save at least 10% of my income every month? You can have this automated into a separate account designated for savings. This will decrease temptations to spend and help put away funds for big purchases such as a house, car, Christmas and/or college funds for children.
- Have I built a 6 month reserve account dedicated to emergencies? Don’t get overwhelmed here, the goal is to create a small series of steps until you reach the goal. Having this savings will help during any crises such as disability or job loss.
- Do I have the needed insurance and financial plan in place for my family should something happen to me? If you need additional help with this, hire a professional. It is worth the investment.
- Do I live well below my means and not spend compulsively?
- Do I have an updated Last Will and Testament?
- In order to live comfortably, do I have a detailed retirement plan that accommodates my lifestyle? Hiring a professional would be beneficial if you are just getting started.
- Is giving back to my community part of my plan?
Organizing on the front end will make it more likely that you will achieve your financial goals. Have specific dates throughout the year to check yourself. Challenge yourself on one or two IRON CLAD goals for 2016. Put some thought into it and be specific.
This article was written by Cindy Goldman, a Realtor with ARC Realty. Cindy studied Accounting at Mississippi State University and Economics at the University of Mississippi. She has been a realtor for seven years and is also a certified interior decorator. She has worked for national and local CPA firms performing tax and audit tasks for Fortune 500 companies.