The year 2020 has turned finances upside down for many households. Lifestyles have changed dramatically, resulting in different shopping habits and a decrease in entertainment spending.
Year-end is a good time to reflect on your values about money, spending, and debt. By incorporating these into your budget, you can help ensure you’re spending money according to your values. For example, do you value taking a vacation every year, but most of your money is going toward eating out, leaving you short of vacation goals? Do you find yourself over-spending at the holidays because you haven’t saved enough for this expense throughout the year?
Your long-term goals may include retirement, building a solid emergency fund, or being debt-free by a deadline.
Here are a few questions to ask yourself:
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How comfortable are you with the amount of cash you need on hand for emergencies and unplanned spending?
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Are you confident about the amount you’re saving for retirement? (10-15% is a general rule of thumb)
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What are your feelings about paying for your kids’ college educations or leaving them an inheritance?
Set goals for different categories to align your spending with your values – remember, there is no “right” or “wrong” here as long as you’re achieving your savings goals and spending your remaining money in an intentional way on the things you value.
Start by evaluating what you’re spending by reviewing and categorizing your last three to six months of credit card and bank statements. Automate your savings and be aware and intentional with your spending. To increase your awareness initially, tracking what you spend is a good way to be mindful, just as you might track what you’re eating when watching your weight. You don’t need to keep it up forever, but do review your progress each month.
In the same way, your “diet” is simply the entirety of what you consume (it isn’t by nature restrictive!). A budget is merely the total of what you’re spending. This is a good time to plan well to be well by reshaping your philosophy toward your budget before the new year by being mindful and intentional.
Lauren E. Robbins (CA Insurance Lic. #0K57671) is a Registered Representative, and an Investment Adviser Representative with/and offers securities and advisory services through Commonwealth Financial Network®, member FINRA/SIPC, a registered investment adviser. Fixed Insurance products and services offered through CES Insurance Agency. Hawekotte Financial Group is located at 2248 N. State College Blvd. Fullerton, CA, 92831. (714) 879-4421.