I don’t know about you but I keep feeling that this year is whizzing by! It is already July. Most of us start each new-year with great plans but the problem tends to be with execution. In January you planned to start afresh with a clean slate; did you list the personal, financial or professional goals or plans that you wished to accomplish this year? How have you fared? Have you made any progress? When was the last time you reviewed those goals?
It is important to review the progress you are making with your finances periodically; half way through the year is a good time to reflect on your goals and plans, take stock, and see if you have lived up to your own expectations. It is a good time to identify any festering problems and time to make adjustments, changes or additions if necessary. With barely six months left to go this year, if you have not made much progress, it may seem overwhelming. Try to make some time, say an hour before the end of this month to review your finances. If you’ve made some progress in even two or three of the goals below, that is progress.
Did you put a budget in place? A budget is one of the hardest things to put in place yet it is one of the most important steps to take in addressing personal financial issues. Do you have a clear idea of how much you are spending each week, or month? Have you tracked your expenses for a period and developed a clear picture of what can be cut back? You can use one of many on line tools or just simply get out a pad of paper and track your expenses manually. You can’t make much progress if you don’t know where all your money is going.
Have you taken steps to reduce your debt and are you carrying less debt today than you did on January 1st 2014? The general rule of thumb and the fastest way to reduce your debt is to tackle your highest interest rate debt first. By automating your debt payments and making incremental principal payments each month, you will soon find your debt is more manageable. Don’t ignore your debt or wish it away; if it becomes a burden approach your lender and discuss the possibilities for restructuring it.
If you have not got a budget in place and you haven’t paid any attention to your debt, it will be difficult for you to save; they are all connected. You need to find the discipline to develop the budget, pay down or at least reduce your debt and then start to increase your savings.
Have you built an emergency fund over these past six months? Financial advisors generally suggest that you should save between 10% and 15% or more of your income. If you are suddenly faced with unexpected job loss, major car repairs, or medical expenses, you will be better prepared to cope if you have this financial cushion to fall back on. The easiest way to start to grow your savings is to automate it by putting a direct debit in place so that you won’t be tempted to spend all your income but rather it can be directed to an appropriate savings vehicle. Most mutual fund companies make it easy for you to be able to automate your savings and investment plan.
Have you invested in yourself? Your human capital is by far your most important asset as it encompasses your knowledge and skills. Have you invested in improving yourself through further education either formal or informal? Consider how much you could improve your long-term prospects through personal development.
Have you taken steps to safeguard your health as you get older through a sensible diet and exercise? By maintaining good health or taking active steps to improve it you could save yourself significant health and medical costs in future and be in a position to fully enjoy any wealth that you have accumulated.
Do you have a will or other estate-planning tool in place? If you already have a will, when last did you review it and update it to make sure you have included any recently acquired assets or new beneficiaries. Circumstances change. Perhaps your assets have grown or
shrunk? Maybe you have had children or grandchildren since you wrote your last will.
Too many people avoid dealing with their mortality because thinking about death makes them feel uncomfortable. However, dying without a will, or a will that is out-of-date, can cost your loved ones so much pain and throw away decades of hard work. Knowing that your young children will be cared and provided for should anything happen to you, will give you a huge sense of relief.
The difference between those who attain financial security and those who do not, is simply the discipline to do something about their financial situation. If you are on track, congratulations! If not, don’t worry, there is still some way to go this year to put things right, but you do need to get started.
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