New Year, New Financial Goals

It’s almost 2019! Have you set your goals for the New Year?  While your resolutions may cover any number of things in your personal and professional lives, at ENSO Accounting, we’re here to help you on the financial side. If you’re not quite sure where to start, we’d like to suggest a few key areas to focus on:

1. The Budget

How many people actually keep a budget anymore?  Unfortunately, too few.  When it comes to managing your cash flow, though, this is an important step. (Both in your business and in your personal finances.)  Make it a point to budget better in 2019!  Either by writing down what you think you spend per month on bills, food, and other unexpected expenses, or tracking it in an app.  Have you heard of Mint?  It’s one of the most popular tools for budgeting since it tracks the money you spend automatically.  It even organizes everything into separate categories to help you decide where you can cut back and where you can’t.

Remember, understanding your budget is just one part of the process.  Along with this new goal comes the responsibility of then sticking to the budget.  If you only budgeted $400 per month for food, that may involve some changes.  Try eating out less and meal planning from home a little more.  Or reducing spending habits somewhere else.  Of course, there will always be events that pop up outside of your control, but that’s why leaving as much room in the budget for savings as possible comes in handy.  If you need help budgeting for your business, give us a call!  It’s all a part of our comprehensive CFO advisory services.

2. The Debt

In 2018 alone, nearly 80% of Americans were in some type of debt.  Between mortgages, student loans, credit cards, auto loans, and medical debt—it’s a problem that affects all generations.  Depending on the amount that you have, getting out of debt completely may not be a realistic goal for the new year.  In fact, it may take quite a few years to pay it off.  Still, by making a plan to reduce your debt overall, you can improve your financial standing considerably.  Calculate how much you can afford to pay additionally each month—while still being comfortable—and then figure out how to distribute that.  We recommend paying off the loans with the highest interest rates first.  Then, when you pay off one, put that money toward paying down other debt!

Of course, the other side to this comes from accumulating debt.  If you’re aggressively paying off existing balances, but also still adding more to other accounts, you’re not necessarily in a better financial position. Make it a goal to also avoid new debt in 2019.  Pay cash for items as opposed to relying on credit cards (that can encourage you to overspend).  Plan ahead for vacations and other big purchases so you’re not going into debt throughout the new year.  With this two-pronged approach, you should find yourself in a very different place by this time next year!

3. The Savings

Hopefully, “save more” was already on your list of New Year’s resolutions, but we included it just in case! If you’re following through with the first two goals we suggested, then this should follow naturally.  But, with tighter budgets, it can be a struggle to save more.  We recommend focusing on two main areas:  emergencies and retirement.  Having an emergency fund can make the difference between plunging into debt from unexpected expenses and handling it without disrupting your daily life.  How much you may need will depend upon your income, your regular expenses, and your lifestyle.  But try to keep a couple months’ salary in a separate account marked “FOR EMERGENCIES.”

You should also start saving for retirement as early as possible.  If you have access to a 401(k) account with an employer match, try to maximize that.  Otherwise, we can help you set up an IRA and set aside funds in a tax-advantaged way. Obviously, if you’re working to pay off debts, you won’t be able to contribute quite as much to these funds, but never underestimate the benefit of compound interest!

We know that financials aren’t a one-size-fits-all matter.  At ENSO Accounting, we can look at your personal situation and work with you to achieve these new goals for 2019.  With the right tools, the right plan, and the right accountant on your side, you may be surprised by what you can achieve in one year.  Let’s get started today!