Make the New Year Prosperous

Start by reviewing your 2009 income and expenses. Tools you can use include Mint.com, Quicken® or a simple spreadsheet. Go through your bank and credit card statements and categorize your sources of income and expense. Expense categories include things like mortgage, utilities, dining out, groceries, health care, beauty care, etc. Separate your expenses into needs and wants. Take a big picture look at your 2009 habits from this perspective. What do you see?

Next set your 2010 goals. Do you want to go on a summer vacation? Buy a new refrigerator? Pay for your grandchild’s private school? What is really important to you as your prioritize your money?

Prepare a budget for 2010. Start with your needs and add in your goals for 2010. If your expenses exceed your income first look for ways to eliminate unnecessary spending, like brown bagging your lunch instead of eating out. Next look for ways to reduce spending, for example, having your hair cut every six weeks instead of every four. Look at behaviors or habits that cause you to spend money. Do you consider shopping recreation? If so replace that habit with another such as a walk in the park, visit to the local library, game night with your friends.

Many people fail to build an emergency fund. We all need at least 90 days of spending stashed away in a savings or money market account for those unexpected rainy days. If you aren’t there yet, be sure your 2010 budget includes a line item for building your safety net.

Budgeting is essential to take charge of your financial life. If you budget, you are choosing what you want. You are rowing your own boat in the direction you want to go. If you failed to budget, you are leaving your goals to chance, going wherever the river will take you. You may get what you want and you may not. Empowered people budget and plan. Join the budget crew today and create the life you want.

As you plan, remember to think past 2010. A solid financial future is built by saving and increasing your net worth. Review your 401(k) or other employer plan and be sure you are participating at least a level to get the full match. If your budget allows, contribute more. Pay down your credit cards, starting with the smallest one first. Celebrate your victory (without using your credit card) and proceed to the card with the highest interest. Prepare a quarterly net worth statement and give yourself regular at a boy/girls for growing your wealth!

May prosperity be yours,

Mackey McNeill, CPA/PFS
President and CEO, Mackey Advisors

www.CultivatingProsperity.com
Mackey@CultivatingProsperity.com