January 2001

What's New in Finances

Make some financial resolutions for a new year & a new century

1/1/2001 -

Without a plan, without goals, how can any of us know where we're going financially? The start of a new century is a good time to set your priorities and resolve to do a better job of managing your money. 

Step 1 - Pay yourself first. Have your bank transfer money from checking to savings each month, or set up an automatic savings plan where you work. ($100 socked away regularly each month and earning only 8.5% grows to $18,000 in just ten years.) Make your own savings plan your most demanding creditor.

Step 2 - Eliminate consumer debt. Avoid those whopping 18% credit card interest charges. Pay off your credit card bill in full each month. If you can't do that, it's time to cut up the cards and start buying only what you can afford to pay for in cash. 

Step 3 - Diversify your investments. Spread your risks among treasury bonds, money market savings accounts, stocks, corporate bonds, real estate, and savings bonds. The recent nosedive in technology stock prices is a clear illustration of the wisdom of not putting all your eggs in one basket.

Step 4 - Profit from tax-deferred savings. Contribute to an IRA or take advantage of your company's 401(k) plan. If you have self-employment income, set up a Keogh plan, a SEP, or a SIMPLE. 

Step 5 - Bring your estate plan up to date. There's more to it than putting assets in joint names. Have your will reviewed by a lawyer, and resolve to start a personal financial plan.

Step 6 - Set long-term financial goals and write them down. Work within three time frames, setting one-year, three-year, and ten-year goals. Evaluate your progress each year, and make adjustments as appropriate to achieve your goals.