New Year Financial Habits
January 25, 2018
“NEW YEAR’S RESOLUTIONS” – Words we are energized by as we anticipate a new year but words we hate after January 1st as they represent accountability and goals not attained!
In reflecting on a new year, here are 5 things I strongly suggest you adopt as regular financial habits each year:
1. Update your financial plans – business and personal.
A good business plan will include a review of your financial position, setting a budget for the coming year, projecting cash flow (which is different than profit), and planning for growth if that’s your goal. It should be done at a minimum annually but a lot of successful businesses do it on a quarterly or semi-annual basis. For the small business owner, a business plan leads right into their personal financial plan. A personal financial plan should be review annually which will include setting goals for the year, reviewing your investment performance, reallocating investments to align with your risk tolerance, making sure you have adequate insurance and setting a personal budget. Most of us hate the word “budget”, including myself, but it is definitely evidence of a good financial practices.
At Hein & Associates, we have the business and personal financial experience to address all these needs in create and responsible ways.
2. Manage your debt carefully and smartly.
If you are like most people, you are surprised by the size of the bill that might come in from your credit card company for your Christmas spending. If you feel like your debt has got the best of you, then together let’s develop a plan to address this debt. Most advisors say pay off the debt with the highest interest rate first, but I recommend pay off the debt with the shortest amortization period. That was you can take the principal payments you have saved, add them to your current payments and thereby accelerate repayment of your debt. As a last resort, you can consider debt consolidation through refinancing your mortgage or obtaining a personal line of credit, but if you do this, be prepared to cut up the credit cards so you can address the new debt repayment structure as quickly as possible. Refinancing should not turn into a pattern. We can put a debt management plan together – we’ve done it for others and we can do it for you, if it helps.
3. Get your taxes done professionally and early.
Don’t procrastinate on this one! Financial successful people know their tax liability long before April 30th, and we can’t do tax planning in April for the previous year. Planning and preparation are key. Though your return isn’t due until April 30th, we’d be happy to calculate your taxes for you in February once you have your information together. Ask us for our 2017 T1 Checklist today! A professional preparer such as Hein & Associates, will give you confidence that nothing has been missed and the tax estimate is as accurate as possible. Non-professional organizations are here to file your tax return today but won’t be around in the summer when you need their help.
4. Plan personal time and family time now for 2018.
I’ve been at this business for over 25 years. Only in the most recent years, have I learned the value of planning ahead and setting goals for the year. One of the goals I set, rather than trying to take a long vacation, is to take more small vacations sprinkled throughout the year. It keeps me focussed on getting the work done that I need to in order to take the time off and keeps me energized when I return from a break. I am thankful and proud to say that I cannot ever get enough family time.
5. Quality over quantity – value over cost.
I’ve learned this lesson the hard way, but with most things in life you get what you pay for. Looking for the best deal or ultimate bargain is time consuming and creates pressure on yourself to always find the deal. Instead I’ve come to realize that paying a little more for something of quality is almost always worth it. That applies to big purchases like houses and vehicles, as well as smaller items like food and professional services. If you have planned for it in your budget as mentioned in point 1 above, treat yourself to something special… and enjoy the pampering.
At Hein & Associates, we are small business owners like you, so we get it and we’re here to help. Your success is our success.