Preparing for Financial Stability in 2017

It’s the most wonderful time of the year…

There are many reasons why this statement exists. In my opinion, one of those reasons is that the end of the year is a great opportunity, a time to reflect and recharge for the new year.

Growing up, New Year’s Eve was an important day in our household. My brothers and I couldn’t be out of the house because we had a family tradition. At around 11 o’clock, my parents would shut everything down – TV, music, telephone line, it was all off. It was time to have a family meeting. My dad would take the lead and it was time to reflect on the ending year. Nothing got left behind. If mom and dad were disappointed for something that happened that year, it all came back and we discussed it. More importantly, we were also praised for our successes and our good behavior. Then expectations for the new year were set. The night ended with a prayer and by then, midnight had come and we were officially in the new year.

That tradition stayed with me and I strongly believe it is a very beneficial one. It doesn’t have to be the night of New Year’s Eve but it is very important to reflect and prepare for a new year. It is estimated that 45% of Americans set new year’s resolutions. That’s more than 140 million people. Are you one of them?

It is easy to get motivation in December because we are about to get a new start, a chance to begin with a clean slate. Whether it is fitness, relationship, jobs, or financial goals, we should all be identifying them before January 1st hits. The difficult task is to stay motivated for the entire year. Having a successful 2017 financially does not happen by accident or by chance. Even if it happens, wouldn’t you want to have some control over it? Over the past few years, Heather and I have set aside time in December to ‘prepare’ for the new year. It is amazing how much we’ve accomplished so far as a three-year-old married couple and I believe it is due in big part due the practice you are to read about.

Tony Robbins said: ‘Setting goals is the first step in turning the invisible into the visible’. What is your current invisible? Do you know what you’re trying to accomplish this upcoming year? Have you written it down?

How to Have a Financially Stable 2017

Evaluate your accomplishments and failures of 2016

Did you set goals for 2016? What were your resolutions? If you were one of the 140 million people who set new year’s resolutions last year, it is time to evaluate your 2016 journey. Maybe you wanted to save an extra $5000 but came $1000 short. Or you wanted to give more to a certain charity or organization; you started out the year doing so consistently but later dropped the habit. Maybe, your goal was to get a new job and increase your salary by at least $10,000 and you did exactly that. Congratulations! Did you want to stop eating so much out and save your money? How did it go? Make a list of all your 2016 goals and rate yourself on a scale of 1 to 5, 5 meaning that you accomplished the goal. Be honest and reflect on what went well and/or south and why.

Once you have evaluated yourself and your goals in 2016, your analysis will serve as the foundation and a guide for your 2017 money goals. For example, if your goal was to increase your salary by $10,000 and you only did by $2,000, it may be too much of a stretch to set a $20,000 salary increase goal.

Set some categories and be specific

I am a big fan of setting specific goals. Saying that next year, you will save more in vague. How much do you want to save in 2017? By how much do you want to decrease your credit card debt?

Start out by categorizing your 2017 goals. Here are a few examples of categories and specific goals.

• Income: ‘In 2017, I will increase my salary to $50,000’. This means that you may have to look for another job. The salary increase may not happen immediately in January but it is your goal for the year. In 2015, Heather and I set our salary goals for 2016. Very early into the year, in March, Heather got an offer for a new job and guess what, it was exactly her goal. Mine didn’t come until November, just a couple weeks ago. It was $5000 over my goal.
• Savings: Set a monthly savings goal. It is important to be realistic here. If you currently struggle to save $200 per month for example, start there and slowly increase it. You can modify your goal anytime during the year.
• Debt: Determine how much you want to decrease your debt by in 2017. Credit card debt, loans, bills, include it all. If you have three or four credit card, let’s start by paying one or two off this year.
• Personal development and Education: What does this have to do with your financial goal? Here is my thought process. If you are going to change your financial situation, your habits must change first. What are your challenges now? Maybe you’ve struggled with financial discipline in the past. Whatever it is, it is time to find ways to overcome your challenge. Visit your local library or bookstore (or Amazon.com) and find literature that will educate you on money management. There are several non-profit organizations such as churches that offer seminars on financial management. Find what works for you and begin your personal financial development and education.

*Make sure you check the book recommendation below for a great resource that has made a tremendous impact for me.

Define your strategy

Your goals are not going to get accomplished by chance. Once you have set them, it is crucial to establish a strategy to achieve them. ‘A goal without a plan is just a wish’, Antoine de Saint-Exupery did say. Your strategy is simply your action plan.

If your goal is to increase your salary (or income), how is going to get done? Increasing your salary with a job is not entirely in your control because you may not receive the promotion or raise that you desire or deserve. However, by writing it down, you are more likely to perform better at your job or look for other opportunities because now, you KNOW what you want and the goal will motivate you.

When it comes to savings or debt, start by ‘reverse engineering’. Let’s assume that your goal is to pay off your Bank of America credit card by June 2017. The balance on that card is currently $1,000. First, you must resolve not to use the card. In fact, it may be necessary to shred it. Without considering the interest, you will need to make a minimum payment of $167 starting in January. Your strategy may be to allocate a minimum of $200 (to cover the interest) each month for the next six to that card. In the meantime, keep making payments on your other credit cards. Once your BOA card is paid off, you will then move to another card (I recommend the one with the lowest balance) and add the extra $200 to the payment you were making.

Live by a budget

Vice-President Joe Biden said: “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” If you value your financial stability in 2017, establishing a budget is the first step to take. Your strategy is strengthened by following a budget. In fact, I believe it would not be sustained if you do not start with a budget. Check out previous blog here and learn how to establish your budget. Make sure you download your free template.

I wish you a successful 2017. Financial stability takes planning and discipline and I believe anyone can do it. Start where you are and be consistent. I wish you a ‘money-smart’ 2017!

*Book Recommendation:

7 Laws of Highest Prosperity: Making Your Life Count for What Really Counts by Cecil O. Kemp Jr