Earlier this month, I was quoted in the CNBC article, “10 financial steps that will set you up for 2015,” which outlined actionable monetary goals that individuals should capitalize on while they’re ready to start fresh. While January is a great time to make financial changes, it’s important to implement long-term plans so that the momentum doesn’t start to fizzle out once resolutions go to the wayside.
In order to make those goals easier to digest, breaking down your financial resolutions into smaller chunks will help you stay on track. Consider these steps that are broken down into three-month increments:
January – March
At the start of the year, it’s essential to make a commitment to the savings plan that you should put in place. Get in the habit of being consistent with your savings or paying down debt. If your annual goal is to save $5,000, come up with a quarterly plan to help get you there, in order to monitor your progress throughout the year.
There’s no better time than the present, and the New Year is a great time to get an advisor. If you have the resources and the time, investing in an advisor is a smart way to get your financial house in order.
April – June
By this time, you should have developed some good habits. If you’ve been successful, you’re probably on autopilot and if you haven’t – you better get going.
It’s tax season and if people get a tax refund, their first inclination may be to spend it. Instead, use that to fund whatever your goal may be, whether that’s saving for college, retirement, or summer vacation.
If you get a huge refund back, that is telling you that you over-withheld the previous year and you may want to change or reduce withholdings. A lot of people may use it as a savings plan, but if they can have even a modicum of will power to set money aside, it’s better than giving an interest-free loan to Uncle Sam.
July – September
During the summer months, people may feel tempted to splurge a little bit. Try to minimize the extra expenses as much as you can. If you do plan a vacation – come up with a budget and stick to it.
This is also back-to-school season and financial literacy is a must. This is especially important for college students who don’t have Mom and Dad to limit any purchases while they’re away at school. Set aside time to talk to your kids about the importance of adhering to a spending/saving plan.
October – December
When you’re heading into the holidays, you should come up with a spending plan on Christmas gifts. You will want to avoid throwing yourself off your financial plan for gifts that you didn’t plan for.
It’s also a great time for people to think about charitable giving. A great way to save taxes is to give appreciated securities. For example, if you bought a stock for $1,000 that is now worth $5,000, if you sell you would have a $4,000 capital gain that you owe tax on. If you give those same shares to charity, the charity can sell without any tax and you still get the benefit of the full $5,000 charitable deduction.
Once your financial plan is put in place, it’s integral to revisit them periodically. If you choose to follow a quarterly checkup system, you can always see if you’re on pace, need to make minor adjustments, or if you’re ahead of your goals. Check in and see how well you’re doing, it’ll pay big dividends over the course of the entire year.