Looking Back to Move Forward
Now that the holiday decorations are packed up for the season, many of my clients are looking at their 2018 financial goals. A great place to start is to look back to your personal finance accomplishments from 2017. It does two things. First, it allows you to celebrate your financial wins and acknowledge the hard work that went into achieving your goals. Second, it calibrates your mindset into what and how you’ll work towards a new set of financial goals.
Taking Stock of Your Financial Life
Imagine it’s January 2017. Examine the balance sheet of your life — the liabilities of debt, your assets including your home, retirement fund, vehicles, etc. Are you better off now twelve months later?
Review your 2017 financial goals and think about the steps you took to accomplish them. For example, some of my clients had specific targets for:
- Paying off or dramatically reducing outstanding unsecured debt
- Diversifying and growing retirement investment accounts
- Saving for a special purchase like a vacation, a new car, a home remodeling project
- Tracking expenses to be more aware of what comes in and goes out each month
- Improving the emotional relationship with money (e.g. binge spending or unhealthy frugality)
What did you accomplish (and not accomplish) in 2017?
The famous quote from Socrates — “The unexamined life is not worth living” — comes to mind. Before you can set realistic goals or New Year’s Resolutions for 2018, first examine the year you recently left behind. Doing so will provide perspective.
One of my clients hit a low point in her financial life about ten years ago. Divorce. Debt. Poor credit. She systematically dealt with the debt and reined in her spending. Each month she diligently paid her bills on time. Once her unsecured debt was paid off, she made it a point to pay off her credit card balances each month. When she spent money, she didn’t begrudge those purchases. Rather, she relished and appreciated the choices she made. No guilt. No regrets. No money drama. She’s now the proud owner of a brand-new car, one she bought with 0% financing. She earned her great credit rating through hard work and she’s now reaping the benefits.
Now imagine it’s January 2019. What’s your financial life like?
The 5 Major Areas
According to The Balance Personal Finance 101, there are five main areas related to personal finance. Use this list to brainstorm your 2017 accomplishments. I’ve found that by spending the time to reflect — both on the good and not-so-good — taps into the motivators that sustain you. As you go through this list, write them down (yes, get out a pen and paper;).
- Budgeting. I prefer calling it a Spending Plan as it doesn’t have the negative connotation like “dieting.”
- Expenses. Once you’ve done #1, you can zero on areas where less spending contributes to your overall goals.
- Debt. Is your debt going up or down? Lingering debt weighs you down emotionally as well as financially. Some debt is healthier than others (e.g., mortgage versus credit card). What’s right for you depends upon your short- and long-term goals.
- Retirement. Are you paying yourself first? Systematic saving can help chip away at this goal.
- Insurance. Making sure your family is covered for a catastrophic event should also be a part of your financial plan. Look at your policies to make sure you have adequate insurance and you’re not overpaying for what you need.
Want Help With Your 2018 Financial Goals?
Want help to achieve your 2018 financial resolutions? Contact me for a complimentary 30-minute consultation.