PERSONAL FINANCE THROUGH LIFES'S STAGES: New Year resolutions and your finance

Last year was tough for most families, with money matters causing much concern. A new year brings with it, a sense of renewal. There is no better time to reflect upon the changes needed in your life with a view to addressing them and setting new goals for the coming year and beyond.

Here are eight achievable financial resolutions to set you on the right financial footing as you face 2010. Don't try to initiate them all at once or you will abandon them; just choose three or four that you can build on.

Get Organised

Getting organised requires a physical set up as well as a new mental attitude. Start by gathering and organising your paperwork: bank statements, investment certificates, insurance policies, title deeds, will, and other financial documents. You could buy a large box file with dividers, a set of files, or clear out a drawer. Personal finance software such as Quicken and Microsoft Money are great tools for helping you keep track of your finances. The important thing is to have a system in place that works for you; somewhere to store all the paperwork and information.

Set Financing Goals

Have you set your short, medium and long-term financial goals? Or, if you already have established financial goals, are they still appropriate? You may need to update them to suit your current situation.

Your short-term financial goals will consist of what you want to accomplish in the coming year. They could be to save for something specific like a car, or a vacation. Longer-term goals might be to put a down payment on a new home in three years, or plan for your retirement in 10 years. If you are planning a family or you have very young children, you could start investing in a plan to cover school or university fees. Prioritise your list of goals and assign them a value and a target date.

Budget

Planning ahead could mean the difference between achieving financial freedom and experiencing financial failure. If you don't already have a budget, try to make one, and stick to it. A good budget will help you to monitor your expenses; this will help you determine where you can cut back and save towards next year's goals.

Pay Yourself First

Automate your savings by putting a direct debit in place so that you won't be tempted to spend all your income. Develop a strict habit of setting aside a minimum of say 10 percent of your income each month for savings or investment purposes such as the purchase of mutual funds, stocks or a transfer to a high yield money market account. If you wait till all of the other commitments are met, or for "extra" money that's left over after you pay your bills, you may be waiting in vain.

Establish an Emergency Fund

If you don't already have an emergency fund, think seriously about building one. Try to have at least three to six months' worth of living expenses in a safe, accessible account, interest bearing money market account. If you have recently experienced unexpected job loss, major car repairs, or medical expenses, you will be better prepared to cope if you have this financial cushion to fall back on.

Review Your Investments

Stocks continue to be selling at a discount to their true value. In spite of the downturn, continue to invest in stocks if you have a long term time frame within which to invest such as for your children's education or for your retirement. However, do pay attention to your asset allocation and ensure that you are well diversified across the primary asset classes.

Plan for Your Retirement

Did you add to your retirement nest egg this past year? Every single year counts; indeed many financial experts suggest that you may need as much as 70 to 80 percent of your pre-retirement income to maintain your standard of living after you stop working. Most of your retirement income will have to come from the money you set aside and invest today. If you haven't done so already, open an individual retirement account.

Prepare Your Estate Plan

I know it sounds like a morbid way to start the New Year, but do you have a will or a living trust? You really ought to put something in place to ensure that your wishes for the protection and distribution of your property are carried out should anything happen to you.

If you already have a will, it is a good time to review and update it to make sure you have included recently acquired assets or any new beneficiaries. Consult a lawyer and give yourself a target date of say the end of the first quarter of 2010 or your next birthday, to put this in place.

Just one last bit of advice: In all these money matters, do remember that the best things in life have nothing to do with money. Remember to count your blessings, not just your assets. Whatever 2009 has brought you, may God grant you good health, happiness, wisdom, security and peace in abundance in the year 2010.

Happy New Year!

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