Personal Finance

Financial focus 2014

“Lack of direction, not lack of time, is the problem. We all have twenty-four hour days.” – Zig Ziglar

I love the weeks leading up to a new year. There’s something about January that fills me with energy. I’m not sure whether it’s the connection we make as a society between a new year and a fresh start, or whether it’s just that having time to relax and wind down over the holiday season leaves us recharged and ready to start again with renewed energy levels and a sharper focus. Whatever the reason, it’s a great opportunity to set and start working towards new goals and it’s also the perfect time to take a good look at our finances and update or create a plan for the new year. Sometimes the new year is an opportunity for new financial focus.

Dealing with money

Some people love dealing with every aspect of money management but for many of us, the thought of taking a look at our finances is on a par with a trip to the dentist – potentially painful, highly recommended and so easy to procrastinate on! The truth is though, that making time for regular financial checkups and adopting those healthy days to day habits is just as important for our financial health as it is for our mouth health. Not only does that checkup reduce our chances of being hit with a painful surprise it also creates a solid foundation for longer, healthier life.

Related article:  Improving your financial health

Do you know your net worth?

An easy way to do a quick check-up of your financial health is to figure out your net worth. It’s a simple calculation and an effective way to take an objective look at your situation; not only will it give you a very clear picture of where you stand financially but it will also provide you with a great way of tracking your progress over time towards your financial goals.

Related article:  Calculating your net worth 

The main advantage of figuring out our net worth is that it gives us a figure in black and white that we can’t argue with. As human beings, we are gifted with a remarkable ability to adjust our perspective in order to make a situation appear better than it actually is. This ability can also be used to justify anything and everything that we really, really want (teenagers and shopaholics are particularly good at this!). The problem with taking this very subjective view is that, depending on what we focus on, we might see our financial situation as stronger, or weaker, than it actually is. It’s all too easy in today’s society to ignore the signs that perhaps we’re living beyond our means and too often we let ourselves believe that just because we’re earning a decent income it means that we’re financially stable.

As anyone who’s dealt with an unexpected traumatic life event such as a job loss or health issue will tell you, it’s only when you’re faced with a dramatic drop in income or a sudden increase in expenses that you see clearly how strong (or not) your financial situation is. Too many of us (mistakenly) believe that as long as we can make the minimum payments we are carrying an appropriate amount of debt but the reality is, if we’re not making enough to pay the balance off in full every month then we’re carrying more than we should be and that makes us very vulnerable.

Saver or spender?

On the flip side of this are the people who are living well within their means and saving money but who feel as though they can’t justify spending money on anything that isn’t a necessity. Their “saver” money personality makes them afraid to put their situation at “risk” by indulging themselves or by investing in anything that has the potential to lose money and so they often find themselves putting off opportunities to both enjoy their money and to maximize returns on their savings. Later in life, this can lead to regret.

Finding financial focus

Taking the time to do an annual check-up and set goals for the year gives you a financial focus, something to work towards and also allows you to set up automatic payments so that you can reach your savings goals with minimum effort. It frees you up to enjoy the day to day, builds your security and reduces stress. Getting excited about a goal increases your motivation to achieve it, so why not take some time this week to get excited about your money and channel it into building something great for 2014.

To help you find financial focus, you can download Jim’s ANNUAL FINANCIAL CHECK-UP GUIDE (718) right here. If you like the guide, pass it on  . . .  it’s free to all!

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