What are your New Year's resolutions?
Maybe you want to get in better physical shape. Perhaps you resolved this is the year to get your finances in order. As a fitness enthusiast and a financial professional, I can't help but draw on the similarities of the two.
Each year, there are likely thousands of people who resolve to get in shape in the new year. Yet, before they know it, March 1 is here and the new home gym equipment is being used as a laundry rack or the greeter at the local gym who knew them by name in January barely remembers them.
I see a similar scenario in relation to personal finances. People say this will be the year they get out of debt, start saving, adding to their 401K or any list of important financial goals. Yet, this is also an area in which people often find themselves back to where they started at the end of the year.
What happens? Perhaps they lose motivation or don't have someone to help hold them accountable. Maybe they simply lack a viable plan.
If you have resolved that 2009 is the year to get your finances in order, consider these steps to help you succeed:
- Start by getting a snapshot of where you are now. What does your net worth statement look like? Are you carrying too much debt? Are you positioned for an unexpected expense or emergency? In the current economy, has your tolerance for investment risk changed?
- Now that you know where you are, the next question is, where do you want to be? What are your goals (both financial and non-financial) for the next year, three years and longer? Is your current "snapshot" offering you a high probability of reaching these goals?
- At this point, you should have determined where changes need to be made or, at least, identified where there may be "holes" in your plan. Are you prepared to make the necessary changes? If you have considered making changes in the past and not followed through, consider what you might do differently this year.
I recently overheard a couple of interesting comments at the gym. The first was a woman who told her friend that she had lost 10 pounds. The response was, "Who did you hire?"
It was an interesting assumption; perhaps her friend knew the woman had tried in the past to lose weight on her own and had failed. The second comment was by a personal trainer who said, "If you could have done it yourself, you would have already done it."
These comments may have been addressing personal fitness, but they convey a valid point regarding personal finances, too. If the goal is important to you, if you have tried to achieve it on your own in the past and have been unsuccessful, it may be beneficial to seek out assistance from a professional this year.
Bob Burger is an investment advisor for Perspective Financial Services, LLC, in Phoenix. He is a certified financial planner practitioner and a certified divorce financial analyst. Contact him at (602) 281-4357, Bob@MoneyAZ.com or www.MoneyAZ.com.