January is a month of new beginnings and a time when we resolve to improve in the coming year. Many conversations revolve around our New Year's resolutions.
Perhaps this year you want to buy something or save for a vacation. These are financial goals. Financial goals can be large and difficult to accomplish. It is best to simplify your approach and take the necessary steps to achieve your financial goals. Here are steps to guide you.
The first thing you have to do is to make sure that you can afford your financial goal. A budget helps clarify where you can cut and make room for your new goal. We make decisions on a daily basis on what to spend our money on. Those decisions are reflected in our bank or credit card statements. Use these statements to begin your budget process. Look at each expense and categorize it between need and want. A need is an absolute necessity for your survival. Often it is a fixed cost such as a mortgage. A want is something you desire. Sometimes it's hard to determine if the expense is a need or a want.
Set a financial goal
Now that we know where we are going to cut back and save, we can put a plan together to achieve our goal.
Once you have your budget and defined a smart financial goal, be sure to put it in a visible place. This way you will be reminded about what is important to you, how much work you have put in to your goal, and what you have left to achieve your goal.
Galaham Zuanich is a financial adviser with Morgan Stanley Smith Barney. Contact him at Galaham.Zuanich@morganstanleysmithbarney.com, Morganstanley.com/fa/galaham.zuanich or 6004 La Madrona Drive, Santa Cruz, CA 95060. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice.