Something we like to focus on here at Tademy360 is personal and business finance. We want to help the everyday person with methods and tips on how to better handle their money. We all can benefit from this assistance and even more so, when we are looking to start our own businesses. We will speak more on both in additional posts and we plan to add a booking option too! Meanwhile, here are some tips from a great article that will give us a head start into the new year.
This article was written by the wonderful Liz Frazier Peck.
For many of us, each New Years day is some variation of this: I wake up, full of hope and motivation for the new year. I join a gym, buy the latest and greatest self help book (my recent fave is anything by Rachel Hollis), organize my closet and call the friends I've lost touch with. Sound somewhat familiar, give or take? Jan 2nd, I wake up still feeling the love. I organize some healthy recipes for the kids and actually go to the gym. Jan 3rd, I sleep in a bit (as much as I can with toddlers) and don't have time for the gym so I do the 7 minute workout on my phone. You see where this is going. Maybe your decline is not as steep or dramatic as mine, but we all do it. We have the best intentions for the new year, become a slightly super-human version of ourselves for a few weeks (or days in my case)... then slowly go back to our normal mortal selves. I'm really not trying to be negative, and I think it's so important for us to take time to think about our goals for the year. But, nearly 50% of Americans ditch their gym memberships by the end of January, according to a recent study. Just sayin.
Which is why I am insisting that becoming financially health is not your new years resolution this year. I forbid it. Instead, around the end of January, print out the below list and tape it to the fridge. Make the decision that you are going to dedicate yourself to becoming more financially healthy, not because of some arbitrary date, but because it will dramatically improve your life.
Everyday (except New Year's Day) Financial Resolutions:
Adopt a positive attitude about a money: This is the first step for a reason. You can't be financially healthy if you don't have the right attitude towards money. The world is filled with such conflicting messages about money. On the one hand, many envy the wealthy and spend their life wanting more money. On the other hand, you often hear things like “money is the source of all evil” and those who want more money are greedy. However, money is not positive or negative. Money is neutral - a simple piece of green paper. Keep in mind throughout the year and as you manage your finances; money is simply a tool that we can use to reach our life goals. Money is not everything, but it is important.
Set life goals: Notice I didn't say "Financial goals". That's because as I mentioned above, the purpose of money is to help us reach our life goals. Take some time and list your big and little, short and long term dreams, such as: starting your own business, buying a new home, visiting France, renovating your bathroom and retiring at 62.Prioritize goals: Once you have all of your goals laid out, list them by importance. Where should you allocate your money? If buying a new home is the most important, then maybe France can wait until next year.
Organize your finances: Otherwise known as a net worth statement, list all your assets and debt by account and amount. If you have a partner, be sure both of you are aware of where your money is, how much you have and how much you owe. I recommend creating a simple spreadsheet that includes account, type (retirement, 529, brokerage, loan, etc), amount, and log in information.Evaluate your budget: Well, the first step is making sure you have a budget...if you don't, see my article on how to easily create a budget. Once you have it up and running, look at your end of month number. Is it positive? Is it positive enough? Walk through each expense and identify items that are unnecessary, or you are paying too much for. Cable, internet and phone bills are all examples of bills you can cut down on by calling the companies and simply renegotiating your plans. Also be sure that "saving" is included in your budget.
Leading to...Pay yourself first: You now have specific goals that you are saving for, so make sure you are paying yourself first each month. And your savings doesn't have to go to a specific goal, maybe it's going towards your emergency fund (need 3-6 months of your salary in your emergency fund) or your general retirement fund. And of course, this takes us to...Max out your retirement: You got it, retirement. The younger you start the better. The more you contribute the better. This is especially the case if your employer matches part of your contributions - that's free money. In 2018, you can elect to defer up to $18,000 of your pre-tax income in 401(k) contributions. If you are over the age of 50, you can do the catch up contribution of $6,000, for a total of $24,000. Other options are contributing to your IRA (you can contribute a maximum of $5,500 to an IRA, plus an extra $1,000 if you are 50 or older), or into a SEP or a Keogh for the self employed.
Review your investments: Once you have your accounts organized and know how much you have and where it is, start to look at how it's invested. I recommend visiting a fee-only financial planner for a full investment review and recommendations, but there are pieces you can do on your own. Review your investment allocations to make sure you are appropriately diversified according to your age, goals and risk levels. Areas to review in terms of allocations and diversification are: domestic vs. foreign, industries, growth vs. value, stocks, mutual funds and bonds.Update all important documents: First things first - find your will. Not sure where it is (or that you have one)? Start by looking in that folder, shoebox, bin or file that has all your really important papers...like a dusty copy of your social security card or your daughters birth certificate. Once you have it, make sure it's still accurate. Most important here is reviewing who would get custody of your children should you die, and making sure it's still accurate. Same goes for any inheritance or valuable property you may have. Along the same lines, review your beneficiaries for all retirement, brokerage and life insurance accounts to make sure nothing has changed or needs to be updated.
Teach your children about finance: First...no, this is not just a shameless plug for my new book (but since you asked, it's called Beyond Piggy Banks and Lemonade Stands: How to Teach Finance to Young Children, coming Fall 2019. Don't worry, you'll be the first to know when it goes on sale). Obviously this resolution is just for parents, but it is oh so important. As parents, we understand the importance of talking to our young children about health and proper nutrition. We get them involved in sports to teach them the value of teamwork and exercise. We are told to start talking about the dangers of drugs with our children at a very early age. Yet with all of this communication, somehow money is still considered taboo. Rarely are parents encouraged to sit down with their children to discuss the importance of budgeting or saving money.
So I am encouraging you to talk about money with your child this year! And no child is too young. Even at five years old, kids can understand some basic concepts like needs vs. wants, saving and sharing. If they learn the basics at a young age, they will have the foundation to continue to learn and make smart decisions as they get older. Just think how many of our adult issues could be avoided if we learned the importance of saving, avoiding debt, and how to spend responsibly at an early age. So make this the year that not only you become financially healthy, but get your children started on the right track as well.
This article comes courtesy of: https://www.forbes.com/sites/lizfrazierpeck/2018/12/28/10-financial-resolutions-that-are-not-for-new-years-day/#26c12a8316ee
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