In this edition, we go back to basics with time-tested advice from (now retired) financial planner Reesa Manning which first appeared in our 2013 January/February edition.

If you’re serious about pursuing your financial goals, first get your finances in order. Here are a few simple steps to keep you on track:

Get organized

Make time to understand your basic financial facts—how you spend your income, how well your investments have performed and how much your net worth increased this year. Organizing your finances will assist in tracking
this information.

Budget your expenditures

Inefficient and wasted expenditures are often major obstacles to saving for financial goals. Analyzing your expenses will help you find ways to reduce spending and increase your savings.

Develop explicit written financial goals

Goals help set our financial priorities and provide motivation for reducing spending and saving for the future. Quantify your ultimate goal and interim goals so your progress can be tracked.

Pay yourself first

If you wait until the end of the month to see how much money is left over for saving, you’ll probably find that the answer is nothing. Pay yourself first, and then find ways to reduce spending to pay the rest of your bills.

Establish an emergency cash reserve

This will give you funds to deal with short-term emergencies such as a temporary job loss, short-term disability, a major home repair or a large medical bill. How much you need in the reserve will depend on your age, health, job outlook and ability to borrow quickly.

Get your debt under control

Take steps to reduce your consumer debt as much as possible—any interest payments are just reducing the amount available for saving. There are a variety of strategies you can use to either reduce your debt or lower the cost of that debt.

Invest automatically

One of the best ways to invest consistently is to make investing automatic. Make arrangements to have a specific amount deducted from your checking or savings account periodically and transferred to an investment account. Keep in mind that an automatic saving plan does not assure a profit or protect against loss in declining markets. Because such a strategy involves periodic investment, consider your financial ability and willingness to continue purchases through periods of
low-price levels.

Develop an investment strategy

Your strategy will depend on a variety of factors unique to your situation, including your risk tolerance, return expectations, investment period and investment preferences. Developing an investment strategy requires evaluating many factors, but it can give you a well-thought-out strategy to help pursue your long-term goals.

Periodically assess your insurance cover

Whether it’s life, health, disability, long-term care, homeowners, automobile or personal liability insurance, over time, your needs are likely to change. Insurance companies offer innovations and riders that might be applicable to your situation. Reevaluating your insurance can lead to lower premiums with coverage better suited to your situation.

Take active steps to reduce your taxes

Reduce your income taxes to free money for saving. Review income tax reduction strategies now, so you have time to implement them moving forward.

Review your estate plan

If it’s been a few years since you’ve reviewed your estate plan, take time to go over your documents to make sure they still reflect your wishes for your estate’s disposition. If you don’t have an estate plan, get one in place.

While many of these tips may sound familiar, it is the rare individual who takes advantage of all of them. Whether you are still working or retired, you need a sound financial plan—now more than ever–– to cover your retirement income needs.