Wake up to your financial goals.
What are your financial aspirations for this year? Would you like to set aside enough for a cutting-edge vacation? Pay off some high-interest debt? Increase your college or retirement savings?
The North Carolina Association of Certified Public Accountants recommends that you take six steps to turn your financial dreams into practical expectations.
1. CREATE A BUDGET
It will be difficult to lower your debt or save for your future if you don’t have a clear idea of your current finances and how you’re spending your money.
Whether you use a software program or a sheet of paper, set down what you earn and what you spend.
In the spending category, include regular items such as rent or mortgage, car payments and other outstanding loans.
Next, make accurate estimates about your variable expenses, such as food, transportation, entertainment and clothing. Try to include those that are easily forgotten expenses, such as takeout lunches or coffee-house stops.
2. LOOK FOR RED FLAGS
Now that you’ve listed what you pay out each month, consider problem areas. Do you have a high-interest loan or credit-card balance? Are you spending a lot each month on jewelry?
Think about whether you can make better choices. Just because you can afford certain expenses, that doesn’t mean you’re making the best use of your money.
If you change bad spending habits, you can preserve your cash and use it more wisely.
3. MAKE SAVINGS AUTOMATIC
We all know that saving something each week is a good idea, but we can easily forget to do it. That’s why it’s a good idea to enroll in an automatic savings plan at your bank or a 401(k) plan through your employer.
You don’t have to settle for a low-interest savings account. Some mutual funds accept initial deposits of as little as $50 or will even waive the deposit requirement if you agree to save a certain amount each month.
Many people save whatever remains at the end of each month, but find that there’s little left. When you designate an amount for automatic savings, it becomes a part of your regular budget.
4. CHOOSE REALISTIC TARGETS
Paying off all of your debt is an excellent target, but it may not be something you can do this year. That’s no reason to give up, however.
You can make great progress if you set reasonable targets that are achievable and that will also make a difference in your financial life.
If you resolve to reduce your debt by 25 percent this year, for example, you might be in a better position to make a meaningful, positive change. A bonus is that you’ll gain the satisfaction of accomplishing what you intended.
5. MONITOR YOUR PROGRESS
Your aspirations and your financial situation may change as the months go by. So, review your ambitions and your progress toward them at least every six months to see how successful you’ve been. Determine if you need to alter your targets, your savings rate or any other factors.
6. GET ADVICE
Remember, you can achieve your dreams if you understand where you stand now, chart a course toward your objectives and make the necessary moves to get there. For help, seek input from recognized authorities.