Financial Planning

Do Your 2014 Financial Planning Now!

Yes, it’s Christmas with all the sometimes overwhelming holiday festivities. It’s “shop till you drop” and parties galore. And it’s “24/7” worrying about the perfect gift for everyone on your Santa list.

OK, now take a deep breath, because now is also the best time to think seriously about your financial planning action items for 2014.

You don’t want to wait till January, because implementing your financial plan action items should begin immediately on January 1st (if not before). Too often we wait until January to think about our yearly financial plans and then February comes, then it’s March…and before you know it, most of the new year is gone – kaput! Excuses come easily, lulling you into believing that waiting till next year is appropriate. Honestly, didn’t that happen in 2013, 2012, 2011, and on back?

Don’t let that happen this year! Time is your greatest financial asset. If you wait, you are wasting it!

How to Start Planning

Here are a few questions to get your 2014 financial planning started. Don’t answer them yet — Just think about them for now…

  1. What were your best financial decisions/outcomes in 2013 and past years?
  2. What were your worst financial decisions/outcomes in 2013 and past years?
  3. How can you further build on the positive decisions/outcomes?
  4. How can you eliminate more (if not all) the negative decisions/outcomes?
  5. What are your achievable 1-year financial planning goals for 2014?
  6. What action items must you implement to achieve these goals?

Know Where You Are First

Before you set off to answer those questions and create your 2014 financial plan, it is critical that you assess your current situation first. Get a sense of your current financial situation by using 2 key elements: (1) your Net Worth and (2) your monthly budget.

To calculate your net worth, use these helpful websites:

To create a monthly budget, use these helpful websites:

 Now Answer the Questions

Once you have calculated your Net Worth and determined your budget, set your financial goals for 2014 based on the tough, honest questions we asked earlier. Go ahead…jot down some answers now. For help with the goals and action items (Questions #5 and #6), see the next section.

  1. What were your best financial decisions/outcomes in 2013 and past years?
  2. What were your worst financial decisions/outcomes in 2013 and past years?
  3. How can you further build on the positive decisions/outcomes?
  4. How can you eliminate more (if not all) the negative decisions/outcomes?
  5. What are your achievable 1-year financial planning goals for 2014?
  6. What action items must you implement to achieve these goals?

Develop Your Goals and Action Items

To be effective, goals and the associated action items must contain certain elements. Develop your goals and action items considering these simple questions: (1) What do you want/need to accomplish? (2) What benefit can you receive from it? (3) What is the target date for achievement? (4) Who/What can you use to help? and (5) How will you measure the results?

Example

2014 Investment Goal:

To achieve my ideal investment portfolio mix going forward which can result in investment returns of at least ____% per year. (You can fill in the blank with your own number.)

Action Items:

    1. By January 5th, read and learn about risk tolerance and risk preference.
    2. By January 10th, use questionnaires/assessment tools, such as the My Optimal Asset Allocation Analyzer (MOAAA), in order to determine my risk tolerance and risk preference.
    3. By January 15th, research and choose my advisory sources (for example, TSOA Asset Allocation), and align my portfolios to the allocations set by those sources.
    4. Check on any allocation changes (for example, in the TSOA Asset Allocation) by subscribing to paid investment newsletters or free websites like investbetterspendsmarter.com.
    5. No later than the end of each month, monitor my portfolio value to see if I am on track with my goal.

You are now well on your way to implementing your 2014 financial plan on January 1st. And with this matter off your shoulders, you can enjoy the upcoming holiday season even more and with gusto!

Remember… If you have no financial plan to know where you are going, you won’t get started, and you’ll wonder why you never got there!

The best to your great 2014 financial plan!

Jim Tso


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Jim Tso wants to “give back” and share his 35+ years of successful personal money management experience to help others to achieve their financial goals. Jim created this InvestBetterSpendSmarter blog (IBSS) to provide you with free investing, planning, savings, retirement, and inspirational tips derived from his unique, innovative, and proven approaches to money management. He welcomes and appreciates your feedback.

Jim would also appreciate it if you would kindly share our IBSS website and blogs with your family, friends, and business associates. Thank you!

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