I love lists like this; they almost always include at least one idea worth pursuing. In offering these top ten tips my wish is to help you start the New Year making conscious choices about money and spending in ways that support your values. Money and quality of life are integral to our sense of wellbeing and our outlook for the future. By aligning your values, goals and actions you take steps today to create a more meaningful life and future, regardless of your financial resources. I hope you enjoy our tips for financial wellbeing.
Set an intention to start the New Year off right
Vow to take an honest look at your financial life and ask yourself how it might be improved. Here’s the key: forgive yourself for past mistakes. As Vicki Robin says in Your Money or Your Life, “no shame, no blame.” Removing self-blame and other emotional roadblocks will increase your chances of financial success. Learn something and benefit from mistakes. Then let them go.
Take care of yourself
I recently read the book Wealth And Well Being, in which the authors describe a beneficial circle. Words around the circumference read, “self care, self worth, net worth.” The implication is that each concept is part of a continuum. Taking care of ourselves makes us feel better; feeling better increases our sense of self worth and this in turn translates into greater net worth, allowing us to continue taking better care of ourselves, and so on. And of course, one of the best ways to save money in retirement is to stay healthy!
Set a life goal and map steps to accomplish it
Start small if you like. Success in achieving small goals helps boost confidence to tackle the larger ones. In a recent survey of affluent people, over half said they wished they’d spent more time on life goals – living a more meaningful and fulfilling life – rather than on financial goals.
Create a spending plan
At least track your spending for just one month. Then, see if you are spending on what matters most to you. If you are doing this exercise with a spouse it is important not to criticize each other’s spending choices. Try asking the question, “Do we receive fulfillment and value relative to the amount of money spent on this?” and “Is this expenditure consistent with our values, with what we consider most important?”
Make sure you have an emergency fund, and add to it if necessary
Better yet, have a couple of sources for funds in the event of an emergency. This saves you from going into debt for each and every emergency or having to tap retirement funds.
Revisit your asset allocation
By this, I mean the percentages you have invested in each of the major categories) of your 40lk, and all other retirement accounts.
Statistics indicate that people often “set it and forget it.” You may have an investment mix that you set up years ago. Ask yourself if you are taking too much risk, or not enough? This should be revisited once each year, at minimum. Rebalance if needed.
Maximize your retirement contributions
However, be careful not to max out your contribution if you don’t have an emergency fund. If you need emergency cash, it’s important not to have to borrow, or worse, take a hardship withdrawal from retirement funds.
Sell a loser (or two) from your portfolio
You know which ones I’m talking about – you purchased these investments years ago and have been waiting for the prices to recover before selling them. This is a common, and also irrational, scenario. People have a hard time facing financial mistakes. This can be very costly. (Refer to tip #1 – learn and let go.) If you wouldn’t buy more of this investment today, you probably don’t want it at all. Put the money into something with better prospects.
Review risks to your financial security
Check your insurance coverage for areas of financial exposure. Having children and moving to a larger home are important life changes. If you haven’t looked at these policies in a few years, things could be out of date and you may not be adequately covered.
Make it a priority to become more financially knowledgeable in the year ahead
Commit to reading something once a day or once a week and stick to it! It can be difficult to sort through the many sources of financial information out there. The trick is to find a few trusted sources that speak to you on your level, and make it enjoyable to learn.
Wishing you financial wellbeing in the coming year!
Originally published on The Motley Fool