On average, about 37% of Americans make New Year goals to save more money. For those with a long-term financial plan or who are nearing retirement, saving money may be an even more prominent goal. As we enter 2019, many of us are taking a closer look at our budgets and savings to make sure we’re able to reach those goals. On top of those, however, it’s even more important to touch base with your finances so you know where you’re at right now.


End-of-Year Evaluation

Over a third of Americans spend more than $1,000 on holiday gifts and, since we are just exiting the Season of Spending, it can be hard to switch gears. For some people, the New Year may mark a time of less spending and more saving; when we reaffirm our commitments to our financial and personal goals. If you’re not the New Years resolution type, however, it’s still important to take some time to get a feel for your current financial status.

Every year it’s important to evaluate:

  • Your current accounts

  • The state of the market

  • Our projections for retirement

  • Changes in long-term goals or status (job change, retirement dates, etc.)

We’ll also talk about what worked in 2018 and what didn’t. Maybe you want to take more trips and will need to account for that in your overall savings, or you want to put away more for a child or grandchild’s college. Discussing all of this helps us calibrate exactly where you’re at with money and your goals for retirement or savings so that you can approach the New Year with confidence.

From there, it’s time to start implementing your plans!


Budgets or Spending Plans?

Less than a third of Americans actually create and follow a budget and you may be one of them. When it comes to my clients, a strict “track every penny” budget may be unnecessary. However, understanding where your money is going and what you have coming in is an important touchpoint that you should perform at the beginning of the year (and as often as needed throughout the year). That’s why spending plans can be a great alternative for people who are budget-averse.

In a spending plan, you essentially account for spending throughout the year. This includes insurance, mortgages, car payments, and other expenses you must pay out. Of course, your spending plan should also include your savings and retirement contributions. By considering your investments as part of your outgoing “expenses” throughout the course of 2019, you’ll be able to gain a clearer picture of how you’re going to reach your savings/retirement goals.

And it’s not all about the “obligatory stuff;” make sure to consider what adds value and joy to your life when you consider your spending plan. Do you want to have more money for travel or spoiling the grandkids? That should be considered in advance so you know what to expect.

“We don’t want to be so frugal that we miss out on the great things in life.”

Once everything is accounted for, you are free to spend the remainder at will and without guilt (barring extreme shopping sprees, of course).

This savings plan approach helps my clients look at the overall expenses for the coming year and self-moderate their spending based on these projections. Of course, once you’ve got an idea of what’s going out in 2019, you may realize you need to cut your spending if you want to reach your goals.


Trim Spending to Reach 2019 Goals

Especially for those who are creeping nearer to retirement, it’s so important to evaluate spending in the context of your goals and plans. If you’re overspending, it can be hard to hit those numbers in your retirement projection, or you may find yourself at sea when you are retired and want to conserve funds.

To help clients with this (even those who aren’t of retirement age quite yet), I recommend they “practice retirement.” Using the numbers we’ve formulated for your retirement income, track spending and what you’ll need to cover expenses (taxes, utilities, travel, etc.). In some cases, your retirement income will be lower than what you make now, so it’s a good idea to make sure you’re comfortable. If you find that your retirement income doesn’t seem to reflect your lifestyle, you’ll need to either a.) trim spending, b.) up your retirement contributions or c.) wait an extra year or two before retiring. Either way, you’ll know an adjustment needs to be made.

And for those readers who are nearer to retirement, it’s important to note that it’s far more impactful to spend less than it is to save more.

“It’s far more impactful to spend less than it is to save more.”


Start the New Year Off Right

Ready to reach your financial goals in 2019 and set yourself up long-term financial success? It doesn’t require an elaborate budget or downsizing in the majority of cases. In fact, it can be pretty simple: Review the big picture. Know what you can spend. Create a spending plan. Stick to it. Oh, and have fun.

If you have questions about your financial plans or how to make the most of your wealth, contact me at [email protected].