As we are all preparing for the holiday season, we at Richards & Godfrey, P.C. want to wish everyone a merry Christmas and a happy New Year! It is a great time of the year to reflect upon our families and spend time with them. It is also a time for many of us to reflect over the past year and set new goals for the upcoming year.
It's funny how every new year we each establish goals for ourselves, our families, and our careers. It's funny how we all do this. We all start out with good intentions and within a few weeks we soon fall off our schedule.
Family and individual finances are on most every one's mind this time of year. Perhaps more so as we hear daily of the looming "financial cliff". Many are worried about how the country's economic hardships will effect your personal finances. For those who are self -employed there is a concern about whether or not your business will survive. As you contemplate your goals for the upcoming year and financial future I would like to share some thought with each of you.
1. Make a budget for your personal finances and for your business. If you fail to tell your money where it needs to go it will go to whomever is asking.
2. In your budget try the following formula: After tax income or adjusted gross try to divide your money each month as follows: A) 10% for long term savings and investment; B) 10% for short term fun, movies, entertainment etc.; 3) 10% for education including continued education; 4) 10% for charitable giving. Study after study has shown that those who provide some of their income for charitable giving be it church, community or other charitable organization, tend to be happier and more prosperous, and lastly 5) the other 60 % is for your household expenses. As a side note, every time I have a $5.00 or $10.00 bill in my pocket I put that in a jar. If I was planning to go to a restaurant but instead decided to stay home and eat, the money I would have spent also goes into the jar. You will be amazed how fast your savings adds up.
3. Does the above seem difficult? Let me share a story. A client that I know was on the verge of bankruptcy. She was in debt way over her head, living with her parents and still barely making it from pay check to pay check. After I explained the above formula for success she decided she could do it but it would have to be modified. She decided she could follow the above formula with $1.00 so with her next pay check to took $1.00 and divided into the four different accounts the other 60 cents went back to cover her everyday expenses. A few weeks later she took $2.00 and did the same thing. The $2.00 then increased to $5.00 and so on. With each passing week she saw instant success. Her saving started to grow, in fact it was the first time she even had a savings account. Her mind started changing and so did her thinking. She found more ways to save money and at the same time was able to pay on her debt. Within three years she was out of debt, paid a down payment on a home and had considerable savings for investing. The main point I want to make is that she started telling her money where it needed to go instead of everyone else telling it where it was to go.
4. Einstein's definition of insanity to keep doing the same thing over and over again and expect a different out come. Are you tired of your financial roller coaster? Give the above formula a try, even if it is modified to begin with as she did but give it a try. You will be amazed by the results and will be thankful you did.
May each of you have a wonderful holiday season and a happy and prosperous New Year!!
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