Every year we make plans to start the New Year with a clean slate, or with new goals. Maybe you want to shed a few pounds, start a new course, or open a business; but have you ever thought about your long-term goals maybe a new car, house, a dream vacation, retirement. Planning for the future starts now and the New Year is a great time to overhaul your financial life for the better. One excellent place to start is by making sound resolutions that can help to get you closer to your financial goals.
Financial Resolution 1: Know What You Want
Have clear, concise financial goals for the year.
Unrealistic Goal – “I want to pay off my credit card and have more money in the bank”.
Instead, say, “I will keep the balance on my credit card down to $0 after every month, and ensure I have over $5,000 in my savings account.”
Financial Resolution 2: Prioritise Your Debts
Not all debt is equal. Make a list of your liabilities/debts and organise them by the annual interest rate. Those with the highest rates (most likely your credit card debt) should be paid off immediately.
Financial Resolution 3: Open an IRA or Annuity
If you haven’t done so already, open an individual retirement account (IRA).
Your financial planner or accountant should be able to guide you on this. Consider the tax advantages that can add up to a significant amount of money by retirement.
Financial Resolution 4: Enroll in an Automatic Savings Plan
Some organisations allow for salary deductions and banks allow for a standing order. This way, you are forced to save because the cash is drawn directly from your bank before you can get your hands on it. Automatic savings plans may also be offered for your brokerage account. Simply call your broker and tell him/her you want a certain amount of money withdrawn from your chequing or savings account each month, on a certain date, and deposited into your investment account.
Financial Resolution 5: Close Unnecessary Accounts
Banks and financial institutions charge fees for everything under the sun. Is it really necessary to have several credit or chequing accounts? Although there are exceptions, in the vast majority of cases the answer is a firm no!
Financial Resolution 6: Make Money Doing What You Love
Most people can name at least one thing they are truly passionate about. One of the ways to enjoy your work is to only do the things you enjoy. Find a way to turn your passions and hobbies into profit.
Financial Resolution 7: Collect Your Change
Any time you make purchases with cash, only spend whole dollar amounts. If you go to the grocery store and your bill comes to $62.39, pay $70 in cash and pocket the change. The first thing you should do when you go home is throw the money in a large container or shoe box. Throw loose change found in your pockets into your box as well. If you adhere to this practice and don’t spend any of the change, you are likely to save a few hundred dollars over the year. Use the money to help pay down debt, buy stocks and bonds, or go on a vacation.
Financial Resolution 8: Give Money
One of the most effective ways to realise the value of money is to give it. The next time you get your pay cheque, take 2% of your salary in cash and give to charity – whether within your family or at a home. The recipients are sure to remember your kindness. It is a powerful and effective way to change people’s lives for the better while giving you a better sense of freedom financially. Suddenly, you realise just how much promise $20 contains. “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.”
– Dave Ramsey, Author and financial motivator
Financial Resolution 9: Begin Accounting for your Expenditure
Knowledge is power. Start documenting how you spend your money. Print a report at the end of every month/ year and evaluate your income and expenditure. You’ll be surprised at the amount spent on small items such as ATM bank fees and coffee.
Financial Resolution 10: Invest in Financial learning
If you want to learn to cook, you read cookbooks. If you want to learn to fix an engine, you ask someone to show you. Consistently learning as much as you can about the financial markets and the nature of money and investments in general is absolutely essential to creating long-term wealth. Visit the Trinidad and Tobago Securities and Exchange Commission’s Investor Education website at http://www.investucatett.com or visit http://www.ttsec.org.tt to learn more about the role of the TTSEC in the securities market.
Make your money work for you and welcome a prosperous New Year 2016!
The Trinidad and Tobago Securities and Exchange Commission (TTSEC) is not an investment adviser nor is it a brokerage house. This article is intended solely to provide you with the information you need to make sound investment decisions and to ensure that you are familiar with and understand your rights and responsibilities as a consumer of financial services.