Your Financial Footprint

The great Chinese philosopher Lao-Tzu is known to have said, “A journey of a thousand miles begins with a single step.”  More closely translated in the original Chinese, “A journey of a thousand miles begins beneath one’s feet.”  Either way, this is a poignant quote, especially when examined from the perspective of personal finance and one that investors from novice to veteran can attest.

Starting a new year inspires us to set new goals and look forward, usually optimistically, to a brighter and more productive future.  For many, this includes tackling our overall financial wellness.  However, the prospect of cleaning up our finances in totality can seem seriously daunting, especially after a year like 2020 when the turmoil of politics, markets, and the economy have many scared. 

Nevertheless, despite the challenges and setbacks we experienced in 2020, now is exactly the right time to summon your inner Lao-Tzu and take hold of your financial fitness and to pursue financial stability through healthy routine and growth looking towards the long-term. 

To be honest, the overall goal of “better money management” IS overwhelming.  It is a really big goal composed of lots of little goals.  So instead of trying to long jump your way across the finish line, chop it up into smaller individual goals that can lead to bigger success in time.  Let us start the journey to financial fitness with one step, on the solid ground underneath our own feet today.  You will find the step-by-step approach more manageable and much more achievable in the long run!

Here are a few ideas to get your started…

It’s hard to know where to begin if you have a mess of accounts, statements, and bills stacked here and there and everywhere.  A great start is to simply get yourself organized.  It’s also an easy mini-goal to accomplish early on at the start of the year. One and done!  Take stock of what you’ve got by gathering and filing year end bank and investment statements, pay stubs, and bills and evaluate your current financial status. 

Think about the following:
1. What are you earning? 
2. Who do you owe and how much? 
3. What assets do you own? 

In a matter of just a few minutes, you’ve created a budget.  Also, this newfound organization will no doubt help you when tax time arrives and you are ready with all the important papers!  Armed with this information, you can identify your top financial goals in 2021.  

Save Something
After organizing, you should have a better idea of where you stand financially today.  Save something, save anything!  Everyone’s decision of where to focus savings energy will differ given where you fall on the financial spectrum, but the most important part is to do something!  Pick one area to enhance - build an emergency fund, start a 529 fund for kids’ college tuition or increase your retirement savings by 1% for the year.  Dare I suggest adding to your vacation fund hoping there will be freer movement in 2021?!  No amount is “too small”, compound earning is a beautiful thing.  Your dollar today will pay off greatly and your future self will thank you!

Pay Down Debt
With a few extra dollars put away to support and grow your future, another easy step is to undertake is your debt.  Make serious strides to pay down your outstanding debt and, more importantly, try to stop taking on new debt.  Like you review assets, review your debts too.  Who do you owe?  Credit cards, student loans, mortgage and car loans can add up and crush you.  Take control today and put extra cash towards these payments monthly.  Like in saving, a little can go a long way and you will be pleased with the progress you can make with some effort (and maybe some sacrifices along the way).  Paying extra will not only reduce the balance of the total debt but will reduce the total interest paid over the life of the debt as well.  Specifically, since March 2020, interest charges have been halted and payments suspended.  If possible, keep making those payments and pay down that total.  The benefit?  Once the regular routine of interest and payments restart, you will be ahead.

Financial fitness is a marathon and not a sprint that is over after a short distance.  Similarly, commitment to your overall financial health and your future is something to be tended to and conditioned over time.  There are no shortcuts.  However, with diligence and planning, it can be built into your everyday life and achieved on an ongoing basis.

Take it from Lao-Tzu, start where you are today with one firm step, and put yourself on the long journey to success.  Set mile markers along the way to celebrate your achievements - you will be pleasantly surprised at what you can accomplish after a month, a quarter or a year.  Cheers to 2021 and cheers to your newfound financial fitness!

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