Finance News

Again to the fundamentals

If this past holiday season looked and felt very different from previous years – understand that you are not alone. The unexpected roller coaster ride we had to take in 2020 was one for the books that gave more than enough opportunity to really prioritize what served as important factors in our lives. While there are still many unknowns on the horizon, one key area that we absolutely know must be in order is our finances. Whether you're recovering from job loss, illness, or unexpected expenses, we're taking the much-needed time to refocus our attention and ensure our money is working in our favor – with the right execution plan.

Refinement is the name of the game

Usually a lot of people try to have a strict budget every year. In theory, there's absolutely nothing wrong with that – as long as you stick to it and can persevere. When this can get difficult, many people create a budget that is unrealistic and the feeling of defeat knocks quickly. We all know how this ends – you broke off the groundwork and just relapsed into old habits. Refine your current budget to come up with something sensible and restrictive if necessary. This approach changes your perspective and doesn't create goals so hard that you feel like they're unachievable.

Identify at least two areas that you would like to work on within your current budget. For example, let's say eating out is a problem area and you want to spend more income on savings. First, check at least 2-3 previous bank statements for real information on how much you've spent over time. Now choose your "new" number, which will now be your maximum for ordering groceries. By evaluating what you previously spent on food and identifying the new number that you want to set up, you have now created a way to accomplish your new goal. If swiping your debit card is a daily temptation, use a till system. As soon as the provided money for the month (or the payment period) has been used up, this is your cut-off. For the remaining money, you throw the extra in your savings account. Developing new habits with very old tactics has serious advantages. Your goals are not impossible, but a new approach must be taken to achieve them.

Tackle newly acquired debt

Let's admit it has been a tough year. Many things happened that should or shouldn't have happened. If you've run into a new credit card debt or have left over from previous years, take a breather and remember, life is happening. Review any credit card statements, potential medical bills, or anything from creditors and list them all together. While this can be done using pen and paper, you should also create some type of online document for easier follow-up. You can compose them with due dates, amounts, and creditors. It is recommended that you keep high yield accounts first, but personally record what works best for you. Starting with the lowest amount owed also has benefits as it builds personal momentum. We all love to celebrate victories along the way, and our finances are no exception. Each of us has different motivators and the common denominator for both scenarios is that debts are actively being paid off!

Save, save and save more

As clich├ęd as it sounds, it applies very much – every penny really counts. Not an amount that is too small that you or your family will not benefit from by saving. One of the easiest ways to make sure you have regular cash flow into your savings account is to have an automatic draft set up every pay period. This can be set by setting a percentage or a fixed amount. Keep in mind that this is not the only method that can be used. If you still have money in your checking account, this money can also be deposited into your savings. Any unexpected money can be used to upgrade your savings account. Last year has shown us the importance of having an emergency account that can be used, and this year (and every year) it still sounds very right. Start where you are with what you have. If you can't currently set a set percentage, that's fine – just temporarily. Planning in advance and saving on recurring bills also reduce the burden of a later defect. Expenses that may not be due on a monthly system can be broken down and saved over time. While none of us could predict the damage so many have wrought in the past year, we owe it to ourselves to do our part to help us make conscious financial decisions.

stay positive

We don't know what the future holds, but we have a choice to operate from a place of gratitude. Are we making the best, most informed financial decisions? Will everything go perfectly and according to our plan? No chance. However, we can make the daily decision to focus our hearts and minds on the positive things. Every year brings new challenges and it is our responsibility to stay on course and achieve our personal financial goals.

Responsible partners can be important in giving us thoughtful words, even when our minds don't. Set up a recurring, virtual monthly finance chat with close ones to keep you updated. Seek assistance from a financial advisor who can act as a sounding board for guardrails or an open ear. Don't stick with what hasn't been achieved in the last year (or years). Every day is a new day to do new things.

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Marsha Barnes (12 posts)

Marsha Barnes is a financial guru with over 20 years of experience striving to empower women worldwide to be financially successful. Financial literacy and literacy are a passion for Marsha and provide clients with practical information that builds their general confidence in their personal finances.

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