4 Steps to Improve Your Financial Life in 2012

By on January 1, 2012

By Hollis Colquhoun –

From Holiday Reverie to New Year’s Resolution

The holiday sparkle is fading away and January has arrived. Financial reality is staring you in the face and you’re probably afraid to look at your budget and credit card statements.

So how can you get over this fear and get back on track with your budget and goals for 2012?

Take these four steps, follow the tips, and you will be well on your way to reclaiming financial control of your life. (If you’re married, take these steps with your husband so you can both benefit from a combined effort).

Step One: Know What You Want

It’s much more motivating to begin a financial journey by identifying your goals and dreams. Pinpoint your top one or two short and long-term goals. (Short-term is one year or less, and long-term is more than a year.) Have you been dreaming about an exotic, two-week summer vacation? Would you like to have a comfortable and financially secure retirement?

Tip: Over 75% of this country’s impoverished are elderly women because that don’t work consistently to build up their Social Security benefits and they live longer than men. So if retirement savings isn’t high on your long-term wish list, it should be.

Take a piece of paper and write down the top one or two goals in each category and tape that list to your bathroom mirror. Every day, several times per day, you’ll be reminded of what you want.

Step Two: Put a Value on Your Goals

Having a goal is great but you also need to have a specific, monetary target. For example, how much will that dream vacation cost? Use the internet to come up with a real cost for your vacation.

Tip: Check out a Kiplinger article that came out last spring, “24 Best Travel Sites to Save You Money.” Figure out how much savings you can create each month and establish a timeline to reach your goal.

Don’t forget to put a value on your long-term goals as well. If you want to save for a comfortable retirement, how much will that cost? On Bankrate.com there is a retirement calculator where you can plug in the number of years you have to save, assume an investment rate of return, (use 5% to be conservative), give an annual retirement income goal and get an estimate.

Tip: If you aren’t employed but your husband is and he contributes to his own IRA, he can set up a Non-Wage Earning Spousal IRA for you and contribute up to the same amount every year into your account.

When you’ve finished your research, put a monetary value next to each goal so you can funnel savings toward each of them every month. If you need more visual encouragement, draw a fundraiser-type thermometer and fill it up as your savings increase!

Step Three: Create a Budget That Moves You Closer to Your Goals

The word “budgeting” has such a scary, negative connotation. So, from now on, think of your financial job as “cash flow management,” which by definition means you need to manage it! Don’t worry, coordinating your cash in-flow with your cash out-flow is really just a math problem!

In order to coordinate the moving parts of your cash flow model, it’s easier to balance the monthly in-flow with the out-flow by adjusting the expenses you can control (e.g. food and entertainment). If that doesn’t result in enough savings, you may need to increase  income as well.

Tip: Flexible and part-time job openings can be found at FlexJobs.com. Subscribe to the service for $15 per month or $50 per year and see job listings in fifty career categories.

Step Four: Tell Friends and Family About Your Goals

Sticking to your cash-flow management plan won’t be easy but if you have the support of friends and family the task will be less daunting. The key is to know your priorities and build a financial plan around them. For example, instead of receiving birthday or holiday gifts, (which you probably don’t want or need), tell your family and close friends about your goals and suggest they put any gift money toward one of them.

Tip: Open an account at SmartyPig.com which is a savings site backed by an FDIC-insured bank that offers above-average interest rates and incentives to help you save a for a specific goal. Invite family members and friends to become members so they can make contributions, too, and watch your pig fill up!

In short, you’re just four steps away from realizing your dreams! Know your priorities and what they will cost, take charge of your financial life and harness the power of your friends, family and resources. You can do it!

Happy New Year!

 

Author and financial self-defense expert Hollis Colquhoun knows firsthand the struggles women go through in divorce. An Accredited Financial Counselor who worked 20 years on Wall Street, Hollis has counseled thousands of clients, most of whom were women going through the difficult stages of divorce, needing sound financial advice. Her Website: www.FinancialSurvivalTools.com

About Hollis Colquhoun

Author and financial self-defense expert Hollis Colquhoun knows firsthand the struggles women go through in divorce. An Accredited Financial Counselor who worked 20 years on Wall Street, Hollis has counseled thousands of clients, most of whom were women going through the difficult stages of divorce, needing sound financial advice. Her book, Women Empowering Themselves: A Financial Survival Guide, is a concise, pocket-book manual that teaches women how to take charge of their finances. Hollis, who holds black belts in Karate and Tae Kwon Do, uses martial arts principles to teach women to protect themselves personally as well as financially. Her Website: www.FinancialSurvivalTools.com

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4 Steps to Improve Your Financial Life in 2012