To A More Positive 2006
The start of the new year is a good time to begin developing new routines to get a fresh start. So it is with your financial future for 2006. January is a great time to begin your new tax strategies, save for your children's college education, start contributions to your 401(k) plan at work and get a head start on reducing your debt.
Before starting anything, you need to have a plan. The creation of a solid financial diagram through goal setting can cut through the bad habits that might hold you back from succeeding. You may set goals to increase the value of your portfolio, but when you do you must be as specific as possible. Determine the methods that might enhance the value of your investments.
Consider your present situation and the circumstances you'd like for your family, things like taking a big vacation or buying that new car. Perhaps you'd like to work less so you can spend more time with your family this year. Develop a financial plan that will allow you to do so. Maybe you'd like to change your career's direction to find something that really excites you. Remember that entry-level jobs might pay you less, so determine how you can deal with a cut in pay so you can enjoy your professional life a bit more.
This time of year is also the perfect time to examine some of your personal needs and make changes, if necessary. Things like insurance for your home, your health or your life. Make sure you have what you need so you are protected for any unforeseen events that might occur. One of the first calls you might make after the new year is to your insurance agent just to examine if your coverage is sufficient.
The forward motion of your financial plan is generally based on keeping more money than you spend. Create a financial plan, a budget, which can serve as your 'roadmap to success' this year. You should actually write down your sources of income and track where your money goes every month. You can do this through the use of sophisticated financial management computer programs or you can simply use a pencil and paper. Just make sure you write it down. That's the most important step.
Actually seeing your personal fiscal situation will allow you to understand and determine where you can cut your debt. Many financial managers say getting rid of your debt is the most important thing you can initially do to improve your financial situation.
And always make sure you are diversified. I always say that you "shouldn't put all of your investment eggs in one basket." Don't just invest in stocks; you must also consider other lucrative investment possibilities. Areas like the foreign exchange market (FOREX), real estate, mutual funds, bonds or commodities. All of these are viable methods of diversification and there are many more. Do your homework and find the investment opportunities that work best for you.
An effective way to learn about what you want to do is exploring your tactics of the past. Life is always changing and those changes can have a definite effect on your financial life in the future. Life-changing events like a marriage or a divorce. Maybe you had a baby this past year and now's the time to make arrangements for insurance and college savings. Rearrange your short-term and your long-term goals to fit your current situation and be prepared for more changes during the year that could affect your financial well- being.
This is by no means a comprehensive list of what you should do to improve your financial security in the new year but it is a good start. You must educate yourself to achieve your best chance of successfully completing your goals this year. Each person's goals and desires are different, but whatever they are, I wish you all the best for a happy and profitable new year.
Originally published in James Dicks: Buy*Sell*Hold magazine.