New Year’s Resolutions: 4 Easy Steps to Becoming Financially Healthy in 2018
Written by Liz Frazier Peck | Forbes Contributor | December 19, 2017
According to the Stress in America survey published in November 2017 by the American Psychological Association (APA), 62% of Americans report being stressed about money. With the majority of people stressed about money, New Years is the perfect time to commit to becoming financially healthy. Interestingly enough, according to a Nielson survey, only 25% include anything related to finance in their New Years resolutions. Enjoying life to the fullest came in at 28%; a lovely goal for 2018, but hard to do if you’re broke and living paycheck to paycheck! Increasingly we’re learning that stress, specifically financial stress, directly affects our health and well-being. The APA study found that around one-third of adults reported experiencing feeling nervous or anxious (36%), irritability or anger (35%), and fatigue (34%) due to their stress. So you don’t have to trash your current resolutions, but let’s all add “become financially healthy” to our list for 2018.
I know what you’re thinking; resolutions are made to be broken. Although most resolutions are probably kaput by January 8, the key is to have a clear attainable plan to meet your goals. Committing to financial health can be achieved in 2018 in four specific easy steps.
Step 1: Obtain a copy of the GOP tax reform bill and become familiar with the proposed 2018 tax changes. No, not really…just making sure you’re paying attention.
Step 1 (really): Establish a list of your goals. We constantly hear that we need to save more, but we’re not just saving for fun. Your chance of success will improve dramatically if you have specific goals you are saving for. Short term goals are within two years (travel, pay off loan), mid term are 2-5 years (buy a home) and long term are 5+ (retire at 62).
Step 2: Create your two key financial statements: budget and net worth. This will get you organized and show your full financial picture: what you have, what you owe, and where your money goes. Everyone hates a budget, but it doesn’t have to be a form of torture. For a simple outline to create a budget, click here. The net worth statement is a snapshot of your total finances. Total all assets and liabilities, then subtract liabilities from assets. Easy. Schwab provides a straightforward online worksheet to follow here.
Step 3: Compare your financial picture to your goals. Identify your strengths and weaknesses. Do you have enough saved to reach your goals? If not, can you pull some additional savings from your budget. Make a plan to get from where you are now to where you want to be.
Step 4: Make an appointment to see a financial advisor. Anyone can complete steps 1 to 3 on their own. Most however, need some extra guidance. This can be intimidating to some, but the purpose of seeing an advisor is to help you reach your goals; the process can be as simple or complex as you want. Ideally everyone would meet with an advisor for a full analysis and comprehensive plan; if you’re not ready for that just make an initial appointment to talk through the process. Most advisors don’t charge for the initial consult (or at least, they shouldn’t), so it can’t hurt to discuss your options. More here on finding the right financial advisor for you.
Sawston Wealth Management, LLC, is a Registered Investment Adviser with the State of Washington. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
The above material was prepared by Forbes. Forbes is not affiliated with the named advisor.