New Year, New Plan

New Year, New Plan

Start the New Year With a Plan to Become More Financially Secure

Along with your 2012 resolutions to exercise more and eat less, why not resolve to have a more financially secure year for yourself and your family? A recent study found that families with a financial plan in place felt more secure, more optimistic about their future, and more confident in their ability to save for retirement.

Create a financial plan for your family by following these steps:

Set Goals. What do you need to feel financially secure or fulfilled? Financial goals may include buying a home, saving for an emergency fund, paying off credit card debt, saving for retirement, or saving for your children's college tuition.

Prioritize. Prioritize your goals to ensure that top priorities are provided for before pursuing less important goals. For example, paying off credit card debt may mean waiting to purchase a house. Try to focus on goals that make you feel most secure, benefit most members of your family, or will cause the most harm if they are deferred.

Budget. Finally, look carefully at how your family spends money. Are you working toward your goals or moving further away from them? A good rule is to aim to spend less than 90% of your household income, with the remaining 10% dedicated to achieving your financial goals. By examining your spending habits closely, you should be able to find ways to cut back. Pay attention to larger purchases and expenses. Is a bigger house worth delaying your retirement? If you can, reduce or delay large purchases and focus instead on achieving your goals. 

As a final thought, don't hesitatate to ask for help developing your plan. For most of us, knowing that you have a plan and are sticking to it will make you happier in the long-run.