10 Simple Action Items to Meet Your Financial Goals in the New Year!

Try these 10 simple action items that can accelerate your progress toward your financial goals!

1. Write down your objectives
Think about the life you want to have, not just the things you want to own. It’s okay to dream big - just make sure your goals are realistic and achievable. Make a list of what you want to accomplish, and remember having several small goals can help keep you on pace and motivated to achieve your longterm goals.

2. Analyze your cash flow
List all of your income sources (salary, commissions, and bonuses) and subtract all of your fixed expenditures (living expenses, debt payments, taxes, insurance, etc.) from your income. Hopefully, you’re left with a surplus. Set a goal to save a specific percentage of your surplus such as 30% to 70%. An excellent habit is “save first, spend second.” Every time you receive a paycheck, achieve your savings goals, and only spend what’s left over. or example, for sales professionals who have a small salary and the potential to earn large bonuses and/or commissions, developing a more conservative cash flow analysis can help; base your calculations off of your average monthly income, not your income potential.

3. Identify your priorities & develop your plan
Split your financial planning goals into three categories: • Short-term goals - liquidity is important to have quick access to your assets. • Medium-term goals - this might include saving for a house, children’s education, or nonretirement goals. • Long-term goals (defined by your expected retirement age) - liquidity is not important, and avoid withdrawing or borrowing from your retirement accounts prior to retirement.

4. Purchase Disability Income Insurance
You have large assets - your car, your house, your retirement savings – but it’s your ability to earn an income that is one of your biggest assets. Purchasing disability income insurance while you’re young and healthy keeps premiums as affordable as possible. Many policies allow you to increase your benefits as your income increases, and the insurance benefits can help you maintain your lifestyle if you lose the ability to earn an income.

5. Make savings a habit
No one complains about having too much in savings, but many complain that they don’t have enough. Payroll deduction and automatic transfers to savings are easy ways to put your savings on autopilot. It’s also important to establish an emergency reserve fund. A good target is having enough savings to maintain your lifestyle for three to six months.

6. Participate in your employer-sponsored retirement plan
Even if your employer’s retirement plan doesn’t offer a match, you should still contribute to the plan. Most young professionals will not have a pension. Social Security may not be enough to maintain your lifestyle during retirement. If you don’t save for retirement, no one is going to do it for you. An easy way to get started is to enroll in an automatic increase program and increase your deferral percentage annually to get to your desired percentage.

7. Choose appropriate investment allocations
Complete a risk tolerance questionnaire, and then choose a diversified asset allocation according to your risk tolerance and time horizon. Don’t worry about how your friends or family invest. You are the only one.

By Douglas MacDonald Financial Advisor Principal Financial Group, Princor Registered Representative Ca Lic 0H24594. 925-786-0328 macdonald.douglas@principal.com