Bruce Lorenz, a certified financial planner at Bolden, walks through six money moves for January: calculate your net worth, review your spending and credit report, build a budget, establish an emergency fund, automate your bills and retirement contributions, and balance spending with saving and giving.
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Hey everybody. Happy New Year. I'm Bruce Lorenz, certified financial planner and advisor here at Bolden. You know, as we start the new year, a lot of times people like to set New Year's resolutions. Maybe they want to go to the gym more, get more exercise. Maybe they want to have a change in their diet. It's no wonder that yogurt sales go through the roof in January. And then they may want to think about some things financially. So as we start the new year, let's calculate where we are. Let's take an accounting. Let's calculate our net worth. What is our net worth? That would be what we own, minus what we owe. As examples, you may have bank accounts, brokerage accounts, savings Accounts, Retirement Accounts, 401ks, IRAs. Those would be the items that you own. But then you may have some debts, some things that you owe, maybe you have a mortgage, maybe you have a vehicle loan or other debts. Let's subtract those things that we owe and get a net amount, in other words, really what we actually own as a bottom line. After that, let's do a careful review of our spending. Now that we have year end statements from our credit card companies, many times they will have a summary, maybe by category of those purchases that we've made over the last year. That's a great way to get a very nice bird's eye view of our overall spending. And then the beginning of the year is a nice time to check our credit report, make sure there hasn't been any information on there that's kind of cropped in that maybe is not accurate. Let's make sure things are in the right order. And then maybe we have some specific goals that we're trying to accomplish this year. Maybe we want to set a budget, we want to finally get a hold and really control our spending. So we have those credit card statements and other bank information to create a budget so that we can stay on track as we set our goals for this year. And maybe this is the year we're going to finally set up that emergency reserve account so that we have a little bit of cash available if we have an unexpected expense. Perhaps we've had this in the past and we spent that money and we have never built it back up. Let's set up that emergency reserve all in context with that budget that we're creating. And then automation. Let's make sure that we have everything possible set up so that we can kind of reduce the amount of time we spend on routine tasks, bill paying, make sure all your bills that can be are set up as an automated payment so that you don't have to worry about a late payment or just taking the time to pay those bills. Automate things like retirement contributions. Make sure that any IRA contributions that you're making are set up coming directly out of your bank account. Your retirement accounts typically might be coming out of your paycheck as an automated payment. Also, look at those 401 contributions. Have there been changes? Did you want to increase your 401k contribution this year? Make sure that's all set up and in place. If you are fortunate to have an employer match with your retirement account, make sure you understand the logistics of that and that you maximize that contribution from your employer. Well, that was a lot. If you can get through all of those items, reward yourself. Give yourself a prize. Perhaps there's a purchase you'd like to make this year that you can include in that budget that you set up earlier. And remember, with your money, it's great if you can spend some, save some, and give some. Thanks everybody.
