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Home | Marc A. Hebert's Money Sense

Marc A. Hebert's Money Sense: Turn your resolutions for finances into reality

By MARC A. HEBERT
January 05. 2018 8:44PM
Any time you pay for things in cash, save the spare change and throw the coins in a jar. The money can add up fast. 



The start of a new year is the traditional time for making resolutions toward achieving your goals, but a goal without a plan is just a dream. Here are our steps to help turn your financial dreams into reality:

Get ready ...

The first step is to contemplate your dreams from an emotional perspective. Think back and emotionally re-acquaint yourself with your dreams. Next, articulate these dreams into well-defined goals. For example, you would like to retire at age 65 with an after-tax spending level of $60,000, adjusted yearly for inflation, to last until age 95. It's important to be specific with your goals.

Then, physically organize your dreams by implementing systems to track your progress toward your newly defined goals. This could be a paper filing system, a computer program, or even an app on your phone. Use what method works best for you.

Get set ...

One of the most important steps is to develop an action plan to attain your goals. First, you must decide the necessary steps to include in the plan. Next, put it all in writing and use your written goals to periodically remind you of your goals and the steps you need to take to meet them.

Go ...

Here's an example guide for you to use as you accomplish your New Year's resolutions for your finances. Pick one step at a time and start working.

. Make yourself a budget. It is an effective way to track spending and avoid financial trouble.

. Stop wasting money. Whether it is a gym membership that you never use or a video streaming service that you never watch, this is money you spend with no benefit to you.

. Establish your emergency fund. This is the go-to fund for the times when you really need it - a job loss, illness or other unplanned expense.

. Save your change. Any time you pay for things in cash, throw the spare change in a jar - it is amazing how fast this can add up. Spare change can also be a part of that emergency reserve.

. Take a look at your credit report and score.

. Review your debts and how you manage them. Seek reputable debt counseling, if necessary.

. Review your insurance coverage with your agent. Do you have the correct type of coverage with sufficient protection? Consider getting an umbrella policy to cover any claims above that of your auto and homeowner's policy.

. Document the contents found in your home.

. Check the beneficiary designations on your retirement accounts, life insurance policies, and 401(k)s and IRAs.

. Review your retirement plan contributions. Saving funds automatically, such as through payroll deductions into a 401(k), is the easiest way to go. Retirement is expensive, and the sooner that you start to save the better your finances will look in retirement.

. Decide if refinancing your home mortgage is an option.

. Read an investment guide or other financial book periodically. Make a commitment to learn as much as you can about the nature of money.

. Locate a tax adviser to minimize your tax liability.

. Locate a financial planner to maximize your finance and investing potential.

. Discuss your estate planning with an attorney. This could involve preparing a will for the first time or reviewing documents written many years ago. Reviewing your estate planning every few years helps to ensure that your wishes are followed once you pass on.

. Make a net worth statement. This involves listing all your assets, then all your liabilities - subtract the liabilities from the assets and you have your net worth. Check this every year to make sure it is increasing in a positive direction.

Once started on your steps, monitor your progress. Are you on target? Are you following your plan? Is your plan working for you? Remember that financial planning is a lifelong process of taking small steps forward.

Marc A. Hebert, M.S., CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at mhebert@harborgroup.com. Your question and his response might appear in a future column.


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