- Start a travel fund (or whatever else fuels your passion): After the rollercoaster of a year 2020 dished out, I think we are all due to have some fun in 2021! For me, this means traveling as soon as it’s safe to do so and I have always found it motivating to start a separate savings account for my fun financial goals. This way I can look at it and dream of all the ways I will spend it in a faraway locale (Peru or Portugal?) and it also inspires me to save more. Setting up an automatic deduction to this account also helps increase the balance and takes all of the work out of it.
- Increase your 401(k)/Retirement plan contributions: Increasing your contributions by a single percentage point every year (and every time you get a salary increase) can have a dramatic effect on your overall savings plan. If you can bump it up even more, the retirement Gods will do a happy dance for you.
- Check your credit report: When was the last time you checked your credit reports? With rampant fraud these days, this is super important to stay on top of as you don’t even want to know all of the stories I could tell you about identity theft and fraud. I set up a task in my calendar to get a different report every four months as you can get one free from each of the three credit bureaus annually. Go to annualcreditreport.com as this is the site authorized by Federal law and run your report (and put in a task to get another one in four months) today!
- The dreaded six letter word…budget: I know, I know, you are probably groaning and rolling your eyes. I would say 96.7% of people absolutely abhor putting together a budget and tracking their spending, but this could be the single most important thing you can do for yourself financially. Why? This is really the make or break when it comes to your overall financial plan. We can’t figure out if you are on the path to living the life of your dreams if we don’t know where your money is going. We are lucky to have some awesome apps these days (Mint or YNAB are the two I recommend) that will track everything for you and make it as painless as possible.
- Hire a kickass financial planner: I recognize this may come across as self-serving, but I promise that doing so will actually be of benefit to you. Why? You are your own worst enemy. Don’t believe me? According to DALBAR (a company which studies investor behavior and analyzes the data), the average equity fund investor earned a return of 5.19% versus the 9.85% the S&P 500 Index returned over a twenty year period ending 12/31/2015. Why is this? Because your behavior is often based on emotions and, I am sorry to say, oftentimes illogical. Partnering with a financial planner is your best chance for financial success.