Many people make a list of resolutions at the beginning of each new year, such as losing weight or learning a new skill. As you make your list, consider including wise financial goals for 2010 and beyond. The New Jersey Society of Certified Public Accountants (NJSCPA) suggests you adopt these smart resolutions:
It sounds simple, but people often forget or make excuses that prevent them from setting aside money for the long term. That’s why it’s a good idea to automate the process. One way to do that is have your bank deposit a certain amount of your payroll check or checking account balance into a savings account each month. Even if you start by setting aside a very small amount, you’ll be surprised at how quickly it accumulates. No matter what your age, it’s never too early to begin saving for retirement.
Watch Your Spending
This is another area where people have great intentions that often don’t get carried out. One way to motivate yourself to take this goal more seriously is to keep a list of everything you spend each month. Categorize the items in areas such as groceries, restaurant meals and takeout, entertainment, commuting and gasoline — or whatever categories apply. Once again, you may be surprised at how much you are spending in certain areas. Are your takeout expenses much higher than you thought? Are you spending a lot on gas when public transportation could be a cheaper option? When you set down your expenses on paper, you may find yourself much more motivated to change your habits.
Maintain a Budget
Once you write down your expenses, use them as part of a monthly budget. A budget is an excellent tool for making sense of your financial life and identifying where change is needed. Add up what you receive in your paychecks each month along with any other income, then deduct your regular expenses, such as rental or mortgage payments, utilities, groceries and savings. You can use what’s left for restaurants and entertainment, travel or other discretionary purchases. But it’s smart to know how much you have to spend before you use your credit card.
Make Your Own Financial Statement
How much are you worth? The beginning of the year is a good time to find out, since understanding where you stand financially can help you make decisions about your future. The process is simple: Add up the value of what you own, including the equity you have in your home or any other property and the amount in your savings, investment or retirement accounts. Then calculate your debts, including your total outstanding mortgage balance, auto loans, student loans and credit card balances. If your assets are greater than your debts, then the excess amount is your net worth. If your debts add up to more than your assets, then think about your debt management plan and recalibrate your spending habits. Is it time to make some revisions in how you manage your money? If the answer is yes, consider new steps to take during the coming year.
Consult Your CPA
As you review your financial situation and chart your future plans, remember that your local CPA can help. He or she can offer the advice and information you need to make smart financial decisions. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.
For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year.
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