Spring is a time of new beginnings. Most of you have completed your tax returns in which you look back to 2015. Now is the time to look ahead to 2016 and beyond as you seek to grow your business or improve your personal financial outlook. If you have drifted along the last several years, you can choose to make the improvements that you know you need to make in order to move forward and build the life that you have dreamed of. Following are steps that you can take to change your direction:
- Prepare a personal financial statement or balance sheet.
You have to start where you are right now. It doesn’t matter how you got to this point. The reality is that this is where you are. This statement will show your assets (what you own) and your liabilities (what you owe) at this point in time. The difference is your net worth or equity. Hopefully that amount is positive. But some people have very few assets and a lot of liabilities. Knowing this starting point is the vital first step in order to get to where you want to go.
- Decide where you want to go.
Once you have your starting point, you must decide where you want to go. You should stretch yourself and set goals that will take hard work to reach. One goal may be to have enough cash for a four month emergency fund in case you lose your job or have a family emergency. Another goal may be to pay off your credit card debt within five years. More long-term goals may be to save for your children’s college funds or for your own retirement. If you don’t know where you want to go, then you will never get there.
- Make a plan to reach your goals
Once you know where you are and where you want to go, then you can make a plan to get there. If you know that you have two children that will likely attend college in 10-15 years, now is the time to begin planning for that. If you know how much that you have saved for retirement now and you know how much you want to have in your retirement account in 25 years so that you can retire, then you can make a few assumptions and see how much that you need to save each year until then.
- Execute your plan
In the example in step 3 about, the amount that you are saving for retirement now may be much less than the amount that you need to save and you don’t see how you can contribute any more. In that case, you will need to increase your income, reduce your expenses, or some combination of the two. To increase your income you may need to increase your skills so that you are more valuable to an employer or you may even start your own business. Each of your goals will need to be part of your plan.
- Get help
It is hard to make changes in our lives without help. Professionals can use their expertise and experience to help people reach their goals in a way that they could not by themselves. They can help you keep on track and help you make necessary adjustments along the way.
Take the first step in examining where are currently are and begin setting goals to where you want to be. Please contact me at firstname.lastname@example.org or at (205)313-6490 if I can assist you in reaching your goals.