Whether you’re ramping up for the summer or just chilling out, now may be a good time to take a quick snapshot of the goals you made for yourself at the beginning of the year. This doesn’t need to be formal, nor should you have a laundry list of goals. Below are some simple steps to help quickly assess where you are in different areas of your life, and what you can do NOW to change course if needed. Where are you in your career, personal, and financial goals?
We’ll start here because as a firm, we believe that unless you inherit your money, how you deploy your human capital (time, talent, and experience) to earn income is your financial foundation. Back in January, we asked you to choose just one career skill to improve in 2017 – it could be your emotional intelligence, time management, public speaking, etc. How are you doing?
- Have you tapped into your resources to help – mentors, books, executive coaches, blogs?
- Have you been practicing the action you want to change? (i.e. giving a speech to a small group of friends before trying it at work)
- Have you checked in with your accountability buddy? How does he/she think you’re progressing?
- You’ve monitored this skill – is it time to tweak, refocus, or perhaps change the goal?
These are your “fun” goals and are often tied to your passions and hobbies. We usually find that our clients’ fun goals are related to experiences, and often can have significant health benefits when achieved. Where are you with personal goals?
- What action have you taken so far? Maybe you’ve resolved to tackle your fear of heights by skydiving or realizing your dream of visiting all of the US national parks. Maybe you’re training for an athletic event like a marathon or planning a bike/motorcycle trip.
- Are you taking your vacation days? Even if you’re not traveling, not taking vacation days is like leaving income on the table. Schedule a stay-cation, or visit friends. According to Forbes, taking vacations has several health benefits including stress reduction, and improving mental and cardiovascular health.
- Speaking of health, how is yours? Make sure you are getting plenty of sleep, exercise, and eating a balanced diet. Some changes you can make now – go for a walk after work now that daylight lasts longer, remove one caffeinated drink from your diet per day, or read a book instead of watching TV before bedtime. This time of year it’s usually easier to eat fresh fruits and vegetables. Doing one or more of these can help your health.
What is the status of your short- and long-term financial goals? You’re likely saving for big ticket stuff like retirement or college, as well as adjusting to immediate needs like car insurance, daycare, home maintenance, etc. Follow some simple steps to assess your current situation:
- Find a filing system that works for you – it could be manual or a website like Mint.com that will give you a snapshot of your total net worth. It will also help with tracking, cash flow management and investment allocation review
- Review your personal financial ratios. These are your savings rate, your debt to income and your lifestyle ratios.
- Savings Rate (Dollars saved to long-term / Total income) – how much you are saving toward long-term objectives.
- Debt to Income (Total monthly debt payments / Total income payments) – how much of your income is going toward debt? Keep an eye on this number.
- My Lifestyle Ratio (Total Income – Taxes – Long-Term Savings – Debt Payments ÷Total income) – This is the percentage of your income that you are actually living on, your lifestyle.
- Make adjustments – Now that you know these numbers, you can quickly make changes such as saving a larger portion of your income, allocating dollars to different goals, and making lifestyle adjustments.
We believe it’s important to clarify your goals, build a plan and take action. The crucial component is to continually monitor and make changes as life happens. Take this opportunity to stop, look around, and see how you feel. Don’t be discouraged if you aren’t where you want to be. Instead, take action now! Information is power, and a good scrubbing of your finances is a great way to give you the facts you need to make changes.