Field of Dreams May Not Require Such a Pocketful of Miracles

What are your financial aspirations for the coming year? Would you like to pay off some high-interest debt, step up your retirement savings or set aside enough for a vacation?

The Pennsylvania Institute of Certified Public Accountants recommends several wise steps you can take to turn your financial dreams into realistic goals, even this early in the new year.

Create a budget? Good idea! Lowering your debt or saving for the future will be difficult if you don't have a clear idea of your current finances and how you're spending money.

Whether you use a software program or a sheet of paper, set down what you earn and what you spend. In the spending category, include regular items like rent or mortgage, car payments and other outstanding loans. Next, make accurate estimates about your variable expenses, such as food, transportation, entertainment and clothing.

Try to include those easily forgotten expenses, such as the cost of buying lunch at work, or stopping for a bottle of water or cup of coffee.

Now that you've listed what you spend each month, consider problem areas. Do you have high- interest loan or credit-card balances? Are you spending a lot each month on take-out meals or entertainment?

Consider whether you can make better choices. Just because you can afford certain expenses doesn't mean you are making the best use of your money. If you change bad spending habits or poor choices, you can preserve your cash and use it more wisely.

Going on Automatic
Of course, it all takes discipline, and so that may involve making savings an automatic venture. We all know that saving something each week is a good idea, but we often forget to do it. That's why enrolling in an automatic savings plan at your bank or a 401(k) plan through your employer is an excellent idea.

Remember that you don't have to settle for a low-interest savings account. Some mutual funds accept initial deposits of as little as $50, or will even waive the deposit requirement if you agree to save a certain amount each month.

Many people aim to save whatever remains at the end of each month, but they often find that there's little or nothing left. When you designate an amount for automatic savings, it becomes a part of your regular budget and can't be forgotten.

Of course, paying off debts matters a lot. Paying off all of your debt is an excellent goal, but it may not be something you can accomplish this year. That's no reason not to try!

You can make great progress if you set reasonable targets that are achievable and that will also make a difference in your financial life. If you resolve to reduce your debt by 25 percent this year, for example, you might be in a better position to make even greater positive change in your financial situation next year.

Remember: Your aspirations and financial situation may change as the months go by. As a result, review your goals and your progress toward them at least every six months to see how successful you have been. You may need to make changes in your targets, your savings rate or other factors.

You can achieve your dreams if you understand where you stand right now. So, start charting a course toward your goals, and then begin take the necessary steps to get there. 



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