December 24, 2015
As we turn the corner into a new year, my biggest hope is that peace and happiness is in great abundance for each and every one of you and all those you love.
You know from years of hearing me invoke “People First, Then Money, Then Things” that I think there should be no bigger focus than building and nurturing that peace and happiness. But there is also always room to focus on the ways you can continue to build financial security in 2016. The progress you make on taking control of your money will, after all, bring even more happiness and peace into your life.
Here are my 16 wishes for how you can make the most of your money in 2016:
1. Focus on what you have, not what you don’t have.
2. Recognize that every dollar you save today and every dollar of debt you pay down today is an important step to the future you deserve. As long as you are moving in the right direction, you are in control of your future. Be patient. You will get where you want to be.
3. If you have credit card debt, pay off the highest rate debt first. And be sure to make at least the minimum payment due on all your credit cards.
4. Check that there are no mistakes or instances of fraud on your credit report. The only place you should ever go to get a free credit report is annualcreditreport.com
5. Sign up for email or text alerts for your checking accounts and all your credit card and debit accounts. It has never been easier to stay on top of your balances, or be able to spot fraud the moment it happens.
6. If your employer offers you a company matching contribution to its retirement plan, be sure to contribute enough to earn the maximum match.
7. If you have the option of a Roth 401(k), give it a long look. I think it is a fantastic deal.
8. Say no out of love, rather than yes out of fear. Keep this in mind as people come to you for financial help throughout the year. You are never to loan someone money, or co-sign a loan unless you are certain it will actually help that person (not just enable more questionable behavior) and you can truly afford to offer help.
9. If you are buying a car and need financing, make it your goal to purchase a car that you can afford with a three-year loan. (No leases!) Don’t take out a longer loan; it’s a ploy car companies use to get you to buy more expensive cars.
10. Focus on the long-term. Even if you are in your 50s or older, you likely have decades more life of you ahead. Don’t be too conservative with your investments. Over the long term – decades – stocks have delivered the best inflation-beating gains.
11. If you want to find the best financial advisor, look in the mirror. No one will ever care more about your money, and what you make of that money, than you. If you don’t yet feel like you are “good” with money, make it a priority to build your personal finance IQ in 2016.
12. If you have a college-bound child, do not, I repeat, DO NOT take out any private loans for college. They are just too risky. Focus on federal loans.
13. Check all your retirement plan and insurance beneficiaries. Can’t remember whom you named? That’s exactly my point! Make sure your money will go exactly where you want.
14. Enough procrastinating. Please make this the year you once and for all get your MUST HAVE™ Documents in place.
15. Live below your means but within your needs. Follow this rule and you will always be powerful with money.
16. You are never powerful in life until you are powerful over your own money. How you feel, think and act with it. May 2016 be your most powerful year yet.
Answer Yes or No to the follow statements.
I pay all my credit card bills in full each month.
I have an eight-month emergency savings fund separate from my checking or other bank accounts.
The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
I have term life insurance to provide protection to those who are dependent on my income.
I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.
As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!
But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.