Checking the Pulse of your Finances
I always feel like it is a good strategy to check up on how you are doing financially throughout the year. Are you on track to save the amount of money you want to save? How about debt, is it being paid off at the speed in which you want it to be paid off? Are you investing for your financial future? Most people have some if not all of these questions go through their head at some point. The question becomes how many people actually accomplish their specific financial goals.
1. Where should I start?
Keep it basic. Especially if you are just starting off in your financial journey. The key is to not get discouraged which may mean going for the low hanging fruit. Example would be just automating your accounts so that you have some amount of money leaving your checking account and going to your savings account. Another example could be just to simplify your financial life. Consolidate random checking accounts into one checking account. These financial areas are usually low cost or no cost to you. If they are accomplished, then it gives you the confidence you need to move on to bigger financial goals. Like (for some readers) paying off student loans.
Make sure to be realistic here; if you want to pay off $45,000 in student loans this year but you only earn $60,000, is that really realistic? On the other hand, if you want to start saving 10% into your 401(k) plan and you earn $60,000, that is attainable.
Keep it simple. Do not over extend yourself and set 25 lofty financial goals, every month. This will lead to discouragement when only 2 out of the 25 are accomplished. It may make more sense to set 2- 5 solid financial goals this month (build an emergency fund, open a travel savings account, open a Roth IRA). Be specific and set a timeframe of when you would like to accomplish these goals.
2. Track your progress every month.
This may seem simple, but you would be surprised how much time can go by before you realize you are off course. Depending on what your specific financial goal is will determine how you decide to track your progress. If you want to save $20,000 for a down payment on a house how much can you realistically put toward your savings account each month? If you decide to apply $500 per month towards this down payment, then it is easy to determine if that goal is working. You are either saving that much a month or not, no gray area here.
However, if someone wants to track how much they are spending each month… that can be a little more challenging. It forces you to go back and look at your online banking statements or get a receipt every time you spend cash. This is not a habit that is usually taught to most people, which is why some people struggle with having even a ballpark idea of how much money they spend every month. Most people can tell you fairly quickly how much they make every month. If you were to ask those same people how much on average, they spend each month, they might look at you as if you were speaking a different language.
3. Prioritize what is most important when establishing your goals.
If that means just setting up a basic emergency fund or paying off your car note, then write these goals down and take steps each week to accomplish them. Or if you have a retirement plan at work that is matching dollar for dollar up to a certain percentage, you should make it a priority to participate.
You would be surprised how many people want to skip these basic financial steps to get into something that they view as “sexier” like investing in Bitcoin in hopes of quick money. I view this as someone that has not even poured the foundation for their house and they are talking about what kind of curtains they want in their bedroom. You are skipping some major financial steps.
The key to all of this is to just start. Building wealth for most people is something that is done over years and decades, not in a few days. If you stay consistent and disciplined with your approach, you should see your financial life improve in several areas. Remember this is a marathon not a sprint. No one else is going to do this for you, so take action to start your plan.
Chris Vasquez, is a Financial Advisor with Lucien, Stirling & Gray Advisory Group, Inc. in Austin, Texas and is passionate about helping people achieve the financial life they want. Chris emphasizes that daily behavior with your finances is more important than knowing every detail about financial planning.
All content provided in this blog is supplied by Chris Vasquez and is for informational purposes only. Barclays takes no position as to the views, and makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.