With the New Year comes a new set of financial challenges. In this economy, those challenges can seem bewildering. Thankfully, I can help you navigate those perilous waters so that you and your family hold on to as much as possible of that most precious of commodities: Money! Here are three New Year’s resolutions that will move you and your family further along the path to financial freedom.
1. Summarize All Your Spending
You already know how important it is to set aside some of your income – even if you start small – to invest and put to work towards building your wealth. But it’s also easy to get tempted to spend more than you should. That’s why you need discipline – and a great way to build discipline it is to prepare a monthly summary of all of your spending.
I’m not talking about your monthly bank statement (though you should pay attention to that, too). I want you to track all your spending so that you can better evaluate your decisions about your cash. Plenty of tools can help you, from a pen and paper to spreadsheets or smartphone apps.
Once you start seeing these lists of where your precious money is going, you’ll be amazed at how quickly you start thinking twice before spending what you should be investing.
2. Get More Yield from Your Assets
My mother taught me about the importance of limiting risk when it comes to money. One of the ways I do that is by prioritizing reliable, income-producing investments – the kind that pay regular dividends, interest or distributions. (Your financial adviser can tell you more about the pros and cons).
One of the great things about this strategy is that you don’t need to worry as much about day-to-day stock price movements. But the best part is the feeling of knowing that your investments are regularly generating cash.
3. Make Sure Your Kids Know How to Manage Their Money
There’s nothing like family to help motivate people when it comes to being smart with money. It makes sense – you’re more driven to save and invest when you know that your savings will help your kids and grandkids – not just yourself. And you’ll be more careful about big risks when you know that a bad decision can affect your family.
So, just as my mother taught me about money when I was young, I have done the same for my kids.
If you haven’t done the same yet, get started this year. It’s easier than you think – start by talking about money in general, so it’s not a taboo subject. Have some conversations about the importance of saving over the long term. We all feel a responsibility to our families and there’s no reason that shouldn’t include financial literacy.
These three New Year’s resolutions are simple, but powerful. If you follow them, you’ll be surprised at how much you save for yourself and your family. They’re also easy to follow, so you have no excuse not to take these steps. You’ll thank me later.
NB: None of this content should be construed as investment advice, especially as they relate to any financial products I may represent. Investors should speak with their financial advisors for any investment advice and to discuss the risks of investing to any financial product. This represents my personal opinions and should be enjoyed as such.