This is the time of year where people are notorious for making New Year resolutions. Although, a recent report from YouGov.com found that just 26% of Americans plan to make a New Year resolution in 2019. Among the top resolutions people make, learning a new skill, saving more money, spending more time with family, and getting more sleep topped the list for 2019.
When I saw that saving more money and learning a new skill was high on people’s lists this year, I got excited. Learning new financial skills not only helps you make smarter money decisions in the short-term, the more you know about your personal finances, the more likely you are to reach your money goals.
So, here are five financial resolutions you can actually keep this year by sharpening or acquiring certain money skills.
1. Automate Your Finances
When you take the labor out funding financial goals, it makes it easier to accomplish. Therefore, if you want to build up your emergency fund, put money away in your child’s 529, max out your retirement accounts, or all of the above – set up automatic deposits for these savings goals. When saving money is automated, something miraculous happens… you actually save! And if saving more money is one of your New Year resolutions, automation can certainly help you keep it this year!
2. Master Your Cash Flow
Nothing is quite as useful to achieving financial success than understanding and mastering your cash flow. The bottom line is that you have to live within your means. So, make it a point this year to track your cash on a monthly basis. How much money do you have coming in? How much money flows out? And where are you spending it? Now is the time to wrangle in any overspending, such as paying high-interest credit card debt, because you spending more than you have will seriously delay true financial success. Save more. Spend less. It works.
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3. Increase Your Net Worth
It can be wildly energizing to see your net worth increase year-over-year. It’s the truest indicator that you’re trending in the right direction in your financial life. Therefore, all you need to do right now is log your net worth today. Add up how much you have in savings and any significant assets like your home equity. Then subtract that number by your liabilities, i.e. any debts you owe: credit card balances and loans. The resulting number equals your net worth. You want this number to be positive and you want it to increase every year. So, this time next year you’ll want to run the same calculations and track how you’re doing.
To find out where you should be depending on your age, check this out. For more information on calculating your net worth, check out this U.S. News & World Report article on 5 Questions About Net Worth, in which I describe a simple and easy way to calculate your net worth.
It’s no secret that the market has taken a dive. But guess what? That makes now the perfect time to buy into it. Why? Because it’s cheap! What does Warren Buffett always say? “Be greedy when others are fearful and fearful when others are greedy.” You can’t build wealth by saving money under your mattress. So, put it to work and invest in a bear market. The impact compounding interest has on your ability to multiply your wealth is significant. You can reach out to me to start investing your money or, if you are just getting started, consider using an online investment platform like Betterment! Gaining and maintaining control over your finances is a learning opportunity and one that can only help you engage fully in the process.
5. Get Tax-Efficient
Tax time is knocking. Aside from paying your taxes, make a point this year to make sure your finances and investments are tax-optimized! This is a financial skill and consideration well worth your time to know about. No one wants to pay more taxes than they lawfully have to, and you can wind up paying higher taxes than necessary if you don’t have a tax strategy in place. Doing simple things like having investment accounts that are treated differently from a tax standpoint can help you pay less taxes now and in retirement. Tax loss harvesting is another way to offset the taxes you pay in the short-term. Be sure to ask your financial advisor and CPA about ways you can be more tax-efficient in 2019!
Whether you call these New Year resolutions or simply money skills you want to master, the point is that you can increase your financial prowess and your likelihood of reaching financial success! These are just five ideas of a good place to start.
HANDY, DANDY & ACTIONABLE MONEY-SAVING TIP:
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- Establish and monitor your budget.
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NEXT FRANKLY SPEAKING POST…
Our next FRANKly Speaking article will share ways to know what business structure is right for your growing small business. Whether you are just launching a new business or your small business is growing beyond a sole proprietorship, I’ll explore the different business structures and help you determine which one is right for you.
As always, I invite you to reach out to me – in real life – with any comments, feedback, or questions! [email protected] Are you ready to take the first step towards securing your financial future? If so, schedule your free 45-minute no-obligation consultation with me today! Schedule Your Consultation with Frank.
Disclaimer: The information contained in this article is for informational purposes. None of the information provided in this article is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. Please consult with your accountant, finance professional, and/or legal counsel regarding your specific circumstance. Reproduction of this material is prohibited without written permission from Frank Shields, and all rights are reserved. Read the full Disclaimer.