Is it time to hit the Financial Gym??
If you head to any local fitness center today, every piece of equipment is being used and it is even hard to get in a workout. If this year is like most, by February most gyms will have plenty of space if you are still committed to your fitness goals.
What about your financial goals? The New Year gives us a perfect time to put a reset on our financial fitness as well. Where should you even start trying to trim up some of your not-so-healthy financial habits??
The first thing to do is take a good look at where you are – both from a current monthly budget and from your longer term objectives. One exercise I always have my financial planning clients do is to really take a look at where the leaks are in your cash flow.
An easy exercise I like to do (often more than once a year, but the New Year is a great time to do this) is to pull the last three or six months of all my bank accounts and credit cards.
Reviewing these statements will reveal a lot: I am often surprised how often this exercise shows we eat out! Eating out is fine- but if you are looking to find extra dollars to save this is one area that can easily be used to pay off any credit card balances that have inched up or increase you monthly savings.
Another sneaky leak are the monthly charges for subscriptions or services that have auto renewed over time and may not even be something you need or are interested in anymore. Trimming this extra fat in your budget is often one of the quickest ways to increase your financial fitness.
Another big leak I see is when clients do not keep an eye on their savings and investment returns. If you have been diligent enough to set aside money for the future, you owe it to your future self to make sure that you have been a faithful steward of those funds.
Thinking that just setting the money aside is all you need to do can cost a lot over the long term. The past several years of low interest rates have cost savers a lot – returns below 1% even with inflation as low as it has been really reduces future spending power. On the other hand the volatility of the stock market lately is something many saver/investors can’t handle either. If you haven’t looked at your overall plan or returns recently – now is a great time.
The New Year is a great time to hit reset on any habits that are undermining your goals. Although the New Year does not allow us to wipe the slate clean on the consequences of our missteps in the past, it is a god time to resolve to clean up our act financially and start seeing better results.
As always- wishing you financial success and confidence! YOU are in control of your financial fitness!