Recommitting to financial goals
Maybe you started the year with plans to reduce debt and save money, but by now you've lost your way. Refocusing your finances and recommitting to financial goals can seem challenging, but it's not a lost cause.
"First, stop beating yourself up for not sticking to your resolution," says Adrian Nazari, founder of Credit Sesame, a free financial analysis site. "We all make mistakes and veer off track every now and then, but that's no reason to give up completely ... It's not too late to get back on track and stay the course."
If you've lost your financial focus, here are five steps to refocusing your financial goals.
Rethink your resolutions
"The trick to getting back on track is to take a good look at why you veered off course," Nazari says. "One reason people lose focus on their financial resolutions is because we end up making them harder than they need to be. Ask yourself if your resolutions are attainable, for one. We often fall into the trap of making extreme, unrealistic and unattainable goals for ourselves."
This time around, focus on making several small, short, achievable financial goals, Nazari says. By setting smaller goals and achieving them one at a time, you're more likely to stay motivated and stick to your resolutions.
Once you've refined your resolutions to incorporate smaller, achievable goals, "pick yourself up, dust yourself off, and jump right back onto the financial track," Nazari says. "Expect to hit a few bumps along the way, but don't let it derail your entire plan. Jump right back in and start again."
Take control of your credit
One of the most important steps to improving your finances is "leveraging your credit to maximize your financial well-being," Nazari says.
Start by becoming familiar with your credit reports. Even though consumers are entitled to one free annual copy of their credit report from each of the three credit reporting agencies, only 4 percent of consumers actually claim their free reports each year, according to Mint.com. Order your credit reports, get to know what your lenders are reporting about you, and dispute any inaccuracies to make sure what's being reported is up-to-date and accurate.
Second, understand your credit score. Bankrate.com can give you a clear understanding of what makes up your credit score, with tips on how to improve your score.
Finally, leverage your credit cards by paying off the balances and using the cards as "free money loans," Nazari says. "(That means) using them to charge only what you can afford to comfortably pay off at the end of each month. By paying the balance in full each month, you'll avoid paying interest, and it gives you huge leverage in the financial playing field."
Keep the planning going
Once you've met your original financial goals, whether that's establishing a plan for paying off your credit cards or refinancing your mortgage to lessen your monthly payment, don't stop there. Keep an eye on your entire financial picture when refocusing your financial goals to continue improving your situation.
For instance, the Tax Relief Act of 2010 will expire Dec. 31, meaning " the tax man may get more from you in 2013, depending on your adjusted gross income and investment strategy," says William Stewart, principal at Rehmann Financial in Troy, Mich. "In September or October, you should sit down with your CPA to discuss proactive tax planning for year-end. It is also important to sit down with your financial planner to see if changes should be made in your investment strategy."
Also, consider meeting with an estate planning attorney to discuss wills or trusts, as estate tax laws also will change at the end of the year, Stewart says. Prepare a budget and make savings for college, retirement and emergency reserves part of that budget process.
"Be diligent and patient," Stewart says. "As time goes on, you will see your assets grow, debt diminish and goals achieved."
Automate your system
Once you've established a workable financial plan, take advantage of the technology tools available to keep your finances in working order. To stay on track, you "need to have automated systems in place that monitor, measure and manage your personal finances, and alert you when you get out of line or when actions need to be done," says Ken Himmler, CEO of Integrated Asset Management in Los Angeles.
Himmler recommends eMoney, an automated solution for busy, high-net-worth, high-income earners. "An automated measurement and management system that focuses on goals takes out the heavy lifting," he says. "We live in a technology age today, yet some people are still manually inputting data into spreadsheets and into programs like Quicken, in order to provide the measurement and management -- when in fact, there are automated solutions out there that can do the job."
In addition to using automated systems such as eMoney to stick to your financial goals, you also can set up automatic bill pay through your bank or credit union, or automated savings allocations to go directly into your savings account from your employer's direct deposit, Nazari says.
Once you've refocused your financial goals, make it a priority to stay focused. "Accountability is the key," Stewart says. "Acknowledge that this is important to the welfare of your family, lock arms with your spouse and loved ones, and be accountable to one another in this process."
To stay on track, take advantage of the many free financial literacy resources and personal finance tools that are available to you at Bankrate.com.
"And if you have a hard time staying focused on your financial goals, try visualizing the end result. Imagine how it will feel when you reach your ultimate goal and how being financially independent will impact your life," Nazari says.
"To have the financial bargaining power that puts the control in your hands -- not the lender's, or the bank's, or anyone else's -- that feeling alone may just be what it takes to help some stay focused on the end result," Nazari says.