NEW YEAR-NEW FINANCIAL OUTLOOK! FRESH FINANCES IN 2010
We've moved beyond 2009 and into a new year and certified financial planner, Kristin Harad (President and Founder of VitaVie Financial Planning, believes in fresh starts!
Don't dwell on last year's set-backs, it was a tough financial year for many. Instead, look at concrete steps to move into a fresh year of healthy finances with manageable goal-setting and simple steps that everyone can do and won't overwhelm.
- Set realistic goals!
If you haven't yet set goals - set a few! But important - set yourself up for success rather than failure, by making sure they are manageable!
You don't necessarily even need a calculator for this one, but be sure to think about 3-5 financial goals you'd like to accomplish over the next twelve months. Keep them real and manageable so that you won't be easily thrown off-track or discouraged.
Perhaps two more easily attainable and shorter term goals to give you an opportunity to check them off the list and feel success - followed with another two more challenging.
Maybe they include buying a new car, paying off your credit card or finally making a meaningful contribution to your retirement savings.
Be sure to attach a number to your goals. This makes them real and helps you figure out the game plan for setting those funds aside.
If you are in a relationship, ask your spouse or partner to do the same, then sit down to compare your goals. If your main priority is to become debt-free next year while your partner's focus is taking a 3-week trip to Bali , this is the time to understand what each of you want and jointly set some priorities.
- Create some accountability for yourself
Like many New Year's resolutions, it's easy to lose track of what you are striving for as soon as the calendar turns to February. So take the opportunity to set up some benchmarks and check-in points for yourself ASAP if you haven't already.
Set your computer to remind you about your goals on the last day of every month, or schedule a quarterly call with your financial planner, accountant or spouse -- whoever can best help you stay on track throughout the year.
Cut your goal into digestible quarterly achievements to stay focused and motivated. For example, if your goal is to have $5,000 cash in an emergency fund, you'll probably want to have accumulated close to $2,500 by June 30th.
If you need to do smaller amounts, spread it out - whatever is easy to manage!
- Pay yourself first
If the financial roller coaster of the past year showed us anything, it's that we all likely need more than we thought to retire.
Regular, automated paycheck deductions for retirement savings are one of the very best financial habits you can create for yourself, and this is the perfect time to get started or see if you can increase how much you are saving.
Even if it's just $25 per paycheck, directing money towards your tax-advantaged retirement account (generally provided through your employer) will help you build substantial savings over the years to come and show you how painless and easy it can be to become a disciplined saver.
You can use this same concept to direct money to your Top 3 goals. Set up separate or subaccounts in advance and be sure to name them with their intention. Put a positive spin on your goals.
Seeing an account named "New MommyMobile" is certainly more fun than "Savings" and clearly states when you are "allowed" to use it (a common problem when we have general savings...we get scared whenever we actually spend some).
"House Surprises" instead of "Emergency Fund" lets you feel good when you have to pay the plumber. Determine the amount you want to save in advance, and direct deposit into each fund.
You may want to jumpstart each one with some cash from your current savings, in case the water heater breaks next month. Send the money to its goal before you even see it.
- Lock yourself away for a mandatory afternoon of savings
We've all seen the commercials about how we could save hundreds on our auto insurance and you may even suspect that it's true, so why haven't you called yet!?! Pick an afternoon to check how much you might be able to save on all of those pesky recurring charges that you haven't bothered to check in on.
Lock yourself in a room and call around to find out if you are getting the best and most appropriate rate on your auto insurance, cell phone plan, cable tv, gym membership and anything else that you pay for on a monthly basis.
Be sure to scour your credit card statements for anything that you are still paying for, but stopped using long ago (like unread magazine subscriptions) and cancel those services, too.
- Understand your credit picture
With consumer credit still incredibly tight, it is more important than ever to actively manage your credit profile. Start with your credit reports, which you can get free once per year from www.annualcreditreport.com. Scour them for inaccuracies and promptly write dispute letters for any errors that may be negatively impacting your credit.
Next, check in on your credit scores. While you'll need to pay for access to get precise numbers, a number of free web sites, such as www.creditkarma.com are offering increasingly accurate estimates.
Be sure to check out the impressive free credit report card tool from www.credit.com. It gives you a letter grade for each facet of your credit score and offers actionable tips on how you can improve.
Significant new credit card laws are also taking effect in February, so check in with each of your lenders to confirm any rate or fee changes that may effect you -- some lenders have increased interest rates by more than 10 percent on millions of Americans in anticipation of the new laws taking effect.
While you have them on the phone, this is the perfect time to ask for a rate reduction no matter what interest rate you are currently being charged. Rate reduction = instant savings!
About Kristin C. Harad, Certified Financial Planner®:
Kristin started VitaVie Financial Planning in 2006 to service the needs of expectant parents and families with young children. By coupling personal financial planning with coaching, Kristin eliminates her clients' anxiety around money and proactively addresses the issues that arise with the increased financial responsibility that accompanies parenthood.
Kristin has dedicated her career to working in the personal financial services arena. With nearly fifteen years of client management experience, Kristin has worked for major financial players including Charles Schwab, Visa, and Chase Bank (JP Morgan Chase).
As such, she has extensive knowledge in retirement planning, credit cards (leveraging what is helpful and getting rid of what is not!), home equity products, and utilizing brokerage services in additional to more general financial planning.
Most of all, Kristin enjoys working with people to help them achieve their goals. To complement her financial knowledge, Kristin is also a trained life coach. She not only completed training through The Coaches Training Institute, but also spent time working at the school to better understand the coaching industry and how it can help in the area of financial planning.
Kristin is a CERTIFIED FINANCIAL PLANNER ? professional. She complete her Personal Financial Planning coursework at UC Berkeley and earned her Bachelors of Science in Economics from The Wharton School at the University of Pennsylvania.
Originally from Harrisburg, Pennsylvania, Kristin has been a San Francisco resident since 1997. Kristin, her husband, and her two children currently live in the Marina District.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIALPLANNER? and in the U.S. , which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
For more information, go to www.newparentfinances.com