Now that 2014 is here...

Whether resolutions, fears, a Christmas spending binge or something else is causing you to sit down and set some goals this year, I want to help get you started. To prevent being overwhelmed, keep in mind, there are five short-term uses of money. Every dollar you earn will find itself in one of these categories:

1. Giving
2. Taxes
3. Debt repayment
4. Savings/investing
5. Lifestyle choices

How you use your money reflects your values, priorities and goals. The best place to begin is by understanding your values and what is important to you in life. Some examples of values could be to not spend more than earned, to balance work and personal life, to have a nice home for entertaining or to experience different cultures through travel. Next, set your priorities, such as paying down debt, saving for retirement, remodeling your home, having a large travel budget, etc. Lastly, set your goals with specific amounts and dates to achieve them, such as paying off your credit card in four months or saving $15,000 for a bathroom remodel by the end of this year. Having a budget will help with the goal setting as it will show where your money is going into each of the above five categories and allow you to decide where and how many changes can be made.

Don’t worry. It’s common to not be able to work toward every goal at the same time. For example, when my wife and I first got married, two of our goals were to save for a house and to save for retirement. Since buying a house was a much nearer goal, we decided that we needed to reduce our 401K contributions temporarily in order to build up our savings for the down payment. Even though reducing our contributions meant we paid more in taxes and our retirement accounts didn’t grow much for a few years, our actions were aligned with our priorities and goals. After we bought our house, we were then able to increase our 401K contributions.

If you’re having difficulty in going through this process or simply would like my guidance, please call me. Similarly, please forward this email to anybody that would enjoy reading it or might benefit by speaking with me about their financial questions or goals.

Lastly, I wanted to share a quote that I hope will aim your perspective and actions going forward: “Contentment is looking back without regret, looking at the present without envy and looking at the future without fear.” Dr. David Jeremiah