2021 Time To Check-In On your Money’s Financial Statement

Happy New Year! It’s 2021 and it’s a new year and a new day. It’s time to review your personal finances and set a goal that this is your YEAR to know and understand your personal Financial Statement.

This is where I share my expertise. In a previous chapter of my professional life, I trained Assistant Account Executives to manage their client’s advertising budgets to actual spending. I hate to say it, but these AAEs had such issues with understanding spending, what was the importance of comparing the actuals to the budget and what to do with the variance? After a few months of training and having the same individuals come back month and after month not understanding what they were looking at, I realized the issue was these AAEs failed to know and understand their own personal budgets and therefore could not apply the knowledge to their professional budgets.

Money talk is like candy for me. I get a kick out of discussing money with anyone and everyone. I have no problem asking people how you doing with your 401K or your Roth? Not because I personally want to know it’s because people need a reminder. The immediate reactions I get is usually an uncomfortable “yeah” with a blank look. Look I’m not asking specifics like “how much is in your your 401K?” I’m asking, “how are you doing with your 401K or Roth? or Are you maxing out in your contributions to both plans?” These simple money questions makes people very uncomfortable for the most obvious reason, lack of education and knowledge when it comes to retirement and money. Yet money should not be an off limits topic because how else can you learn about it? Personal finances are not taught in school. Mom and Dad are only going to share so much unless you hammer them about it and truth be told, YOU have to seek the knowledge in educating yourself on your retirement plan and finances and that should be a top priority of being an adult.

So let’s take a look at your personal finances and start 2021 with baby steps. I’ll expand more on each item in their own topic.

1-Establish and examine your budget. There are many apps out there that can help with spending, but you can use Google sheets as a starting point in establishing your budget and spending. Take a look at what you’ve been spending on the last few months. This can easily be done by downloading your spending reports from either your bank or credit card portal. Create categories and analyze your spending habits. What’s going in and what’s going out? Most important part of establishing your budget is knowing what your priorities are and where your money is going?

2: Credit Card Debt — YUCK! Credit card interest is like an unseen moth in your closet eating away at your favorite sweater all summer long and when you pull it out in December it has mini holes all over it. That little moth is high interest on a credit card eating away at your pocket book when you are trying to pay down the balance. Baby Steps: Try and pay off at least one credit card in 2021 and reduce using high interest credit cards by calling your credit card company and asking if a lower rate is available. Make a point to leave the credit card at home, use your debit card or cash instead. Don’t add any additional debt.

3: Establish an Emergency Reserve Fund! Set up a savings account that is not attached to your current every day checking account to prevent unnecessary access. There are several high yield savings accounts available such as Capital One 360 Performance Savings, Synchrony Bank, and Vio Bank. Since we are recommending baby steps, try and shoot for as little as $25 being automatically transferred to your high yield savings account every paycheck. If you can afford more after evaluating your budget then do so. It’s all about moving the money to your savings account in the background. Out of sight, out of mind!

4: Fund your retirement plan. If you work for a company that offers matching to your 401K contribution, contribute as much as the company matches. If the company is matching 5%, then contribute 5%. Don’t walk away from free money, because that is what company matching is for. The contribution to your 401K is tax free and reduces your taxable income. You can either pay the the government in taxes now or put the money away for yourself.

These are just a few steps to get you motivated to really work on your finances. You probably heard it a zillion times to get your money and budget in gear but I’ll put it to you more frankly.

“You are the CFO of your money. No one else is going to manage your $$ but YOU. Your successes in handling your personal finances impacts how well you can manage your professional budgets. Don’t be that employee who screws up the savings on your client’s budget because you had no clue what you were looking at.”

FYI — the links above do not generate any cash for me. You can also type in the name in the search bar to go straight to the website for research. Thanks