Best 3 Way to Start the New Year

By Ashley Bleckner, CFP®, MA

The new year is a time for personal reflection; a time to consider commitments and resolutions. This year, why not make finances a priority? Take control and prepare for the uncertainties of tomorrow.

Not sure where to begin? Here are 3 financial resolutions to get you started in 2018:

  1. Get organized – Otherwise it can cost money and time (not to mention stress).

Have you ever heard the saying, “You don’t know what you don’t know?” We make hundreds of financial decisions a day, big and small. Getting an understanding of where your money is going is essential to success with a sustainable budget. Start by looking at what you spend on your fixed expenses (mortgage, utilities and other reoccurring bills). Next, review what you spend on other items daily, weekly and monthly (entertainment, eating out, clothes, coffee, etc.). Spending patterns will emerge. This information can make you more aware – providing you with insight to make educated decisions.

Many credit card companies and banks provide year end summaries in January, sometimes even breaking down spending by categories. This is a great way to get started with data on the past twelve months. This also captures those items you only pay for once or twice a year (property tax, car registration, etc.).

Bonus Tip: Have an ever-growing stack of paperwork/mail/etc.? It can become overwhelming fast. Recycle old statements, bills over a year old and tax-related papers that are at least seven years old. Consider switching to paperless statements going forward and save electronic PDF copies of tax returns. Go green!

  1. Make saving a priority – And, save in the appropriate accounts.

First, treat savings like an expense. Automatically pay yourself (into a savings or investment account) just like you do your insurance or phone bill. It’s easy to set up and it avoids the “hole in your pocket” complex. It may feel awkward at first, but seeing your savings grow will make it worth the change.

Second, make sure you are strategic in your savings strategy. Do you have your money in the right accounts (Trust vs. IRA vs. Roth IRA vs. 401(k) vs. Deferred Compensation Plan vs. ….)? Consider your current savings allocation and the purpose for which you are saving. What is the right mix of taxable, pre-tax, and tax-free assets for you? Make a plan and execute on it.

  1. Discuss finances with your partner – In an honest and clear way.

You may not like the idea of talking to your significant other about finances, but it’s important for your relationship and future. Avoiding the conversation can lead to fights, busted budgets, and underfunded savings accounts.

Financial problems, left unresolved, can also escalate and spill over into other elements of a relationship. According to a study by Utah State University (Jeffery Dew), couples that fought about finances more than once per week were 30% more likely to separate.

If you, like many, have found it difficult to initiate these financial conversations at home, check out Jon Theriault’s tips here in his article titled Money Talks. We can also help facilitate these conversations in the office. Make it a priority for 2018.

This year commit to following through. After all, the new year is all about new beginnings.