December.31.11Personal Finance
Money Matters with Nimi

2011 was a tough year for most families, with money matters causing much concern. A new year brings with it, a sense of renewal and there is no better time to reflect upon the changes needed in your life with a view to addressing them and setting new goals for the coming year and beyond.

Most of us start the New Year with resolutions to exercise more regularly, to maintain a healthy lifestyle, to be more prayerful; yet within a few months we are back to our old ways. This year, resolve to develop good financial habits that will last a lifetime. Here are ten achievable financial resolutions to set you on the right financial footing as you face 2012. Don’t try to initiate them all at once or you will abandon them; just elect say three or four that you can build on.

1 Organize your finances

Getting organized requires a physical set up as well as a new mental attitude. Start by gathering and organizing your paperwork: bank statements, investment certificates, insurance policies, title deeds, your will, and other financial documents. You could buy a large box file with dividers, a set of files, or clear out a drawer. Personal finance software such as Quicken and Microsoft Money are great tools for helping you keep track of your finances. The important thing is to have a system in place that works for you; somewhere to store all the paperwork and information.

2 Learn About Money and Finances

Invest in improving your knowledge of money and finance. Whether you are interested in learning how to manage your money, how to get out of debt or how to plan for your children’s education, or for your retirement, there is an enormous amount of information available to help put you in control of your finances and bring you closer to achieving your goals. You can do this online, or by reading books and magazines or attending a personal finance seminar.

3 Set financial goals

Have you set your short, medium and long-term financial goals? Are they still appropriate for your current situation? Whatever your goals are – short term goals such as reducing your debt, purchasing a new car or a vacation, or longer term goals such as purchasing a new home, an education fund for the children, or a secure retirement, setting goals brings you closer to achieving them. Decide what is most important for your future, prioritise your list of goals and assign them a value and a target date.

4 Monitor your spending

Planning ahead could mean the difference between achieving financial freedom and experiencing financial failure. If you don’t already have a budget, try to make one, and stick to it. A good budget will help you to monitor your expenses; this will help you determine where you can cut back and save towards next year’s goals.

5  Build an emergency fund

Think seriously about building an emergency fund. Try to have at least three to six months’ worth of living expenses in a safe, accessible account, interest bearing money market account. If you have recently experienced unexpected job loss, major car repairs, or medical expenses, you will be better prepared to cope if you have this financial cushion to fall back on.

6   Start to save

Saving is an important key to financial success. Automate your savings by putting a direct debit in place so that you won’t be tempted to spend all your income. Develop a strict habit of setting aside a minimum of say 10% of your income each month for savings or investment purposes such as the purchase of mutual funds, stocks or a transfer to a high yield money market account. This money will add up quickly. If you wait till all of the other commitments are met, or for “extra” money that’s left over after you pay your bills, you may be waiting in vain.

7 Invest for the future

Reducing or paying down your debt and putting money aside for a rainy day should be a priority. But if you have already savings in place and are in control of your debt, 2012 could be the perfect time to put some long term investments in place. Whilst investing allows you to grow your money, bear in mind that there are more risks involved in investing your money.

Stocks continue to be selling at a discount to their true value. Inspite of the downturn, continue to invest in stocks if you have a time frame of over five years, such as for your children’s education or for your retirement. However, do pay attention to your risk profile and ensure that you are well diversified across the primary asset classes. A good financial advisor will review your unique circumstance and help you to prepare an appropriate financial plan.

8   Plan for your retirement

Did you add to your retirement nest egg this past year? Every single year counts; indeed many financial experts suggest that you may need as much as 70 to 80 percent of your pre–retirement income to maintain your standard of living after you stop working. Most of your retirement income will have to come from the money you set aside and invest today. If you haven’t done so already, open a retirement savings account.

9 Prepare an estate plan

I know it sounds like a morbid way to start the New Year, but do you have a will or a living trust? Putting your last wishes down in writing should be a top priority, particularly if you have dependants. Most parents have this on their ‘to do’ list but it often gets left on the back burner. You really ought to put something in place to ensure that your wishes for the protection and distribution of your property are carried out should anything happen to you. Knowing your children will be cared and provided for will give you a huge sense of relief.

If you already have a will, it is a good time to review and update it to make sure you have included recently acquired assets or any new beneficiaries. Consult a lawyer and give your self a target date of say the end of the first quarter of 2010 or your next birthday, to put this in place.

10 Remember it’s not all about money

Just one last bit of advice: In all these money matters, do remember that the best things in life have nothing to do with money.  Remember to count your blessings, not just your assets! Whatever 2011 has brought you, may God grant you good health, happiness, wisdom, security and peace in abundance in the year 2012.


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