It’s a new year and a new chance to focus on improving personal finances, but like any resolution, sticking with the goal is the key to success.
Set small, achievable goals in order to stick to a new year’s resolution to improve personal finance habits, says Leanne Jacobs, the host of “Beautiful Money” podcast and author of “Beautiful Money: The 4-Week Total Wealth Makeover.”
“I’ll start the year with three key financial goals,” Jacobs says. “I don’t do many goals because you can get overwhelmed.”
[See: 10 Financial New Year’s Resolutions.]
Some big or complex financial goals may require the assistance of a financial advisor, says Timothy Steffen, director of financial planning at Baird in Milwaukee. He likens getting a financial advisor to getting a coach at the gym.
“Left to our own devices, we’re going to lose interest in these things, so someone to ride roughshod over you is probably going to add a lot of value,” Steffen says.
There are, though, a few things people can do on their own to start 2017 with good personal financial habits, experts say.
Automate your savings. This is the easiest one for people to do on their own because most people can talk to their company’s human resources or payroll department to create a direct debit out of their paycheck. “Once it’s set up, it’s out of sight, out of mind,” Steffen says. “And two, in order to cancel it, it takes some effort. It’s not like signing up to go to the gym and not showing up one day.”
Jacobs calls this “sleeping wealthy,” because money is automatically being moved from spending accounts to savings accounts. “So as we sleep, our money is working for us,” she says.
Kenny Elkins, wealth manager at Equity Concepts, in Richmond, Virginia, says starting small, even with $50 a month, gets people into the habit. When savings are automated, people are less likely to stop or reduce a monthly draft.
“If you don’t have that accountability of a monthly draft, you end up starting to slide around April or so,” Elkins says. “Other things take precedent like the car needs new tires or it goes to basketball fees.”
There are many areas where to save, such as rainy-day accounts, retirement accounts or college savings for people with children. Jacobs says people who are stressed about money should write down what causes stress to give them insight about where to direct savings.
“It gives you a focused self-awareness when it’s on paper. You can say, ‘this is where I need to clean up’ and this can be your action plan,” she says.
Elkins says that physically blocking out time to plan makes a difference. “People will spend more time planning their vacation in 2017 than they will their financial future,” he says.
Look to get organized. Whether it’s a new wallet, a box with folders to file receipts or using a computer program to keep track of bills, people have better control of their finances when they know where their money is coming and going.
[See: 10 Questions to Ask Before You Hire a Financial Advisor.]
Jacobs says psychologically it can help to get a new wallet, and keep that wallet organized. “Keep it organized and be grateful for every (dollar) bill that’s coming into it,” she says. “It’s like a symbol of a new beginning. Keeping that wallet organized says a lot about how you respect money.”
Tracking expenses is a good way to get a better handle on money, whether it’s as simple as having a box with folders for individual expenses or personal-finance software.
“I keep my bills organized. I start out my year with a clean box so I’m controlling my money,” Jacobs says. “And I file (bills and receipts) every day so I don’t get a mess that accumulates over six months. This also helps me commit to pay bills on time.”
Steffen says he uses software to keep track of expenses, which at tax time makes the task more efficient and less costly. “It can track retirement savings, document charitable contributions and keep better track of your expenses so you’re not walking into your accountant’s office with the proverbial box of receipts,” he says.
Review estate documents. The new year can be a good time to review any life changes from 2016 and check to see if estate documents need to be updated, Steffen says.
“As you’re reflecting back on the year, did you get married or divorced? Where there any births or deaths in the family? Did you relocate to another state? All those events can trigger you to update your estate plan,” he says.
Duncan Rolph, managing partner of Los Angeles-based Miracle Mile Advisors, says this might be a time for people to work with a financial planner or a lawyer to make sure they and their families are protected in cases of sickness, accidents or premature death.
“Estate and income tax laws have been changing, so it is best to consult with your financial advisor and lawyer when creating or updating the plan,” Rolph says.
Elkins says when considering an estate plan, it’s not just a will, but it’s also important to have all legal documents drawn up, including power-of-attorney designations and an advanced medical directive. To make sure this happens, he said to schedule a set time on a work calendar to call an attorney or financial planner.
[Read: How to Profit From Other People’s Failed New Year’s Resolutions.]
“Put it on your calendar like you would if you’re going to see the dentist or if you had a business meeting,” he says. “If it ends up on a to-do list, it will be the Fourth of July and never has gotten done.”
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3 Easy Personal Finance Resolutions to Make Now originally appeared on usnews.com
