Goals are on most people’s minds this time of year. Whether you want to read more, lose a few pounds, or live with less stress, there’s something about a new year that motivates us to do something about those things we always say we want to do but never prioritize enough to do them. But here’s the tricky part: just setting a goal won’t help you much. You need a plan that gives you practical steps that get you closer to your goal, one step at a time.
And since finance-related resolutions consistently fall in the top five most popular New Year’s resolutions, (1) we want to make it easy for you to take action by giving you 5 ways to jump-start your finances in 2020!
1. Take Stock Of Your Financial Life
Before diving deep into the details, take a moment to get a big picture of your finances. Have you picked up some less-than-stellar spending habits? Do you feel regret at how you’ve spent your money or neglected to save? Are there certain areas you excel in? Whatever your financial life has looked like in the past, don’t let your mistakes keep you from moving forward. Instead of dwelling on what you wish you could have done differently, learn from your mistakes, reflecting on what worked and what didn’t. Then take your newfound insight and wisdom and move forward. Take stock of your current financial situation, including income, savings, debt, and expenses, and decide what you want them to look like in both the short term and long term.
2. Get Out Of Debt
If you are ready to start conquering your goals, one of the first steps you need to take is to eliminate debt. When you pay 10-30% interest on any number of credit cards or loans, you limit the amount of money you have available to put toward your goals, whether that’s maximizing your retirement account or going on a dream vacation. Become relentless about reducing your debt and interest costs and consolidate accounts where you can.
If you have a loan with a significantly higher interest rate than the others, you may want to work on paying off that one first. Or, if you’re feeling overwhelmed by debt, try paying off the loan with the smallest balance first, no matter the interest rate, to gain some momentum. Use a debt calculator to calculate out how long it will take to pay off your debt, then build extra payments into your monthly budget so you aren’t tempted to spend that money elsewhere.
Creating an emergency fund can help you avoid accumulating more debt. By setting up a liquid, easily accessible savings account, you won’t have to rely on debt to cover those inevitable life expenses, such as home repairs or medical bills. Create this cash cushion by putting aside money from each paycheck until you have enough to cover approximately three to six months’ worth of living expenses. You will never regret having an emergency fund at the ready.
3. Make A Savings Plan
If you aren’t already saving for your future, the sooner you start, the better. And if you’re already saving, find ways to save more by cutting back on expenses, channeling a healthy percentage of any raises and bonuses directly to savings, and automating savings increases of 1% of your paycheck every few months. It may not seem like you are making much of an impact, but every dollar helps. Your increased savings can be invested into your company 401(k) or 403(b) plan or your personal IRA.
Then watch the magic of compound interest grow your money over time as you earn interest on your principal and interest, making your money work smarter rather than harder as you pursue your goals.
4. Invest Intentionally
On the savings note, make sure you’re investing your hard-earned money properly. Anyone can close their eyes and pick a random mix of mutual funds to invest in, but having a customized retirement plan based on your circumstances, goals, and risk level is what will get you from point A to point B. Asset allocation is the most critical investment decision you can make, especially in our current volatile market.
Work with a financial professional to determine your risk tolerance level and create an investment strategy that will give your portfolio a clear sense of purpose. It’s also critical to rebalance on occasion to ensure your portfolio is still aligned with your goals and time horizon.
5. Partner With A Financial Professional
Whatever your situation, whatever your goals, a financial professional can walk you through each of these steps to get your financial plan in shape. You’re much more likely to make your New Year’s resolution a reality if you have a concrete plan in place. At Whittenburg Wealth Partners, we believe that a strong planning process is the best way to create a more financially secure plan. If you want our help to create a customized, detailed blueprint of what you need to do to meet your goals, easily schedule a no-fee, no-obligation virtual appointment or contact us at 801-839-7050 or firstname.lastname@example.org.
Austyn Whittenburg is a wealth planner and partner at Whittenburg Wealth Partners, a family-owned and family-operated financial and wealth management firm located in Salt Lake City, Utah. Austyn has 7 years of experience as a wealth planner and spends his days helping business owners, emerging successful families, and their ensuing generations simplify their financial lives and discover meaningful solutions. Austyn received a Bachelor of Science in Finance from Brigham Young University and holds the Certified Financial Planner™ (CFP®) and Certified Business Exit Consultant (CBEC®) credentials, his FINRA Series 7 through LPL Financial and 66 registrations through LPL Financial and Stratos Wealth Partners, and his life, health, disability, and annuity insurance licenses. Austyn is active in his community of Herriman, Utah, where he resides with his wife, Ciera, and two young sons, Grayson and Graham.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.