The most popular New Year’s resolution that people make is to get healthy and fit. Always a tried and true resolution, there was an even greater spike this year in the number of Internet searches for subjects surrounding “getting healthy”, according to iQuanti, a data analytical company. In addition, there was also a substantial increase in the number of people who were specifically interested in “gym fitness”, so it would appear that folks are serious when it comes to their health and physical fitness.
Obviously, I think that’s great. But I’d like to suggest that the New Year is also a very good time to plan for and establish your financial fitness goals. Whether it's increasing the amount of your retirement savings, setting money aside for a down payment on a house, saving for an exotic vacation, or launching a college fund for your children, the New Year is the perfect time to assess where you are and where you’d like to go in the coming year.
Below are a few tips that might help you to become more financially fit in 2018:
The New Year is a perfect time to conduct a comprehensive review of where things stand financially with you at this current moment in time. What are your assets and liabilities? How much debt are you carrying (including credit card debt)? What is your rate of saving? Are you participating in a 401(k) or an IRA? Are you actively involved in any retirement planning, college cost planning, investment planning, estate planning, or social security and healthcare planning? It is important to know exactly where you are before you can realistically determine what your future goals might be.
It is important to establish very clear and concise goals for the year so that you have specific targets to aim for. In addition, I would also advise that you do not undertake too much. Often people can become overwhelmed if they are attempting a complete financial makeover on their own. Perhaps establishing one or two clear-cut goals is best. Maybe there’s a vacation you’ve always wanted to take? A new car you wanted to buy? Maybe you’ve decided that you want to retire your credit card debt? Maybe you want to create a rainy day fund? Whatever goal you establish for yourself, make sure it is clear and specific and make sure you create an actionable plan to achieve it.
For some people, the effort to create and sustain a budget is akin to root canal surgery. But there are several personal finance software programs that make this chore seem no more agonizing than a routine dental cleaning. With just a few keystrokes, you can create a budget that will track all your fixed expenses, savings and spending. It will also allow you to easily compare your actual expenses against your planned expenses, which will permit you to make the necessary adjustments on the fly. A careful budget will also provide you with the organizational skills you’ll need to spend less and save more over time.
In order to optimize your savings, it is crucial to curtail the use of debt to finance your consumption wants and needs. If at all possible, minimize the use of credit cards to avoid their high-interest rates and costly fees. However, if you have debt, it might be wise to establish a debt management strategy to reduce or eliminate it altogether. One way to do this is to make a list of all your debt and arrange them by their rates of interest. Those with the highest rates should be paid off as quickly as possible. It is counterproductive to pay 19 percent interest on your credit cards, when your savings and investments are probably yielding far less. Also, you may want to accelerate the payments on student loans or your home mortgage as another way to save on interest costs.
If one of your financial goals is to save more money, an automated savings plan will help because the cash is withdrawn from your paycheck or checking account before you ever see it. In addition, automatic savings plans are now available for everything from brokerage accounts to government bonds. Money can be easily withdrawn from your checking or savings account each month, on a certain date, and deposited into the investment account of your choosing. The U.S. government also offers a similar program for those who are interested in buying savings bonds.
Like any type of training, it isn’t easy to become financially fit. It takes time, energy, commitment and discipline to obtain the necessary skills to succeed over time. But with some resolute determination, it is possible to achieve all the financial goals you have set for yourself in the coming year.
Here’s to a very prosperous, healthy and financially fit New Year!
United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.
The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances. Please contact your financial adviser with questions about your specific needs and circumstances.
Information and opinions expressed by individuals other than GS PFM employees do not necessarily reflect the view of GS PFM. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.