05 Jan 2018 Financial Resolutions & Habits: Part 1

It’s said that the ancient Babylonians began the storied tradition of the New Year’s Resolution some 4,000 years ago. Admittedly, their resolutions were essentially promises made to their gods in hopes to garner favor in the upcoming year should they keep the promises, so maybe you’re not into that kind of thing exactly, but odds are (roughly 40%) that you may have resolved something in the last week or so.

So, over the next few weeks, we’re going to take a look at some financial resolutions–and perhaps more importantly habits–that we think are important and simple enough that you can act on them in 2018 without adding unnecessary stress to your life.

1. Be Aware. I think every new year is a new opportunity to choose awareness. Carl Richards talks about this a lot. The reason most people don’t budget well is that the way budgeting is typically done or taught is a bit archaic and cumbersome. The biggest benefit of budgeting is simply that it forces you to notice where your money is going. And you can do that without keeping a notebook full of receipts. So, in January, why not take the time to notice what you’re spending your money on, every single time you spend it. And then over time that noticing will start to create patterns of recognition in your brain. The money you spent on X every other day didn’t really add any happiness to your life, but that one thing Y that you bought is something you’re proud of and glad you invested in. By reducing the X‘s in your life and maximizing the Y‘s, you’ll be uncovering extra cash flow, saving more, and living more happily.
2. Take a Look at Your 401k. The beginning of the year is a great time to check on your employer retirement benefits and take a look at a few things:
   1. Are there any new investment options in the 401k? If so, check with your investment advisor to see if any of the new ones work better for your investment strategy. For example, 401k plans are notorious for having a bunch of stock funds to pick from, and then about two or three bond funds. A newer, better bond fund would be a meaningful thing for your plan!
   2. If you’re maxing out your 401k, go ahead and increase your contribution percentage so that you take advantage of the increased maximum contributions this year.
   3. If you work for a public company, see if you’re eligible to participate in an Employee Stock Purchase Plan, and if so, let your advisor know, as these can be really valuable savings vehicles.
   4. If you’re a small business owner and wondering how to save well for retirement without the burden and expense of a 401k plan, talk to your advisor about options like SEP-IRAs, SIMPLE IRAs, and some others. These are much simpler, cheaper, and more effective for many small business owners.

That’s it! Only two things to think about this week. Notice where your money is going, and do a quick check of your retirement benefits. Next time we’ll dig into some more. If you’ve got any questions about these, please give us a call.