by Justin Krane
15 Tips to rev up your financial life! Something tells me that the stars are aligning for you, and that 2011 is SO your year. You are going to be clear on exactly what you want, and you’re setting out on the right path financially to get it. It’s about time, right?
Sometimes dealing with your money is so tough — in fact, it can feel totally overwhelming when you’re not sure what to do. The good news is, you’re not alone. These are some questions I hear all the time. . .
- How much should I save?
- How much should I spend?
- Where should I invest?
- How can I grow my money so it’s there for me down the road?
- How can I get a lot of new clients so I can have a huge 2011?
- What’s the best way to stay organized when I am crazy-busy running my business?
I’m a big Oprah fan, and just like her, I have my own list of “favorite things” — tips that you can use right now to get ahead in your financial life and plan for your future. Of course, I really wish I could give you all a new car, just like Oprah does — and maybe one day I will! But until then, these 15 tips will help you rev up the engine of your financial life and get rollin’ in 2011.
1. Pay yourself first. Try saving between 10-15% of your gross income for a specific goal such as retirement or a down payment on a house. Make it easy on yourself. Consider setting up an automatic electronic funds transfer from your checking account into a separate savings account, investment account, or an IRA. Realize that the earlier you start saving for a future goal like retirement, the better off you will probably be down the road.
2. Make a list of your discretionary and non-discretionary expenses. Take a deep breath when you read this one — you need to do it, for sure!
Discretionary expenses are things you choose to spend money on (shoes, manicures, massages). Non-discretionary expenses are things that you have to spend money on (rent, food, utilities). Knowing the difference gives you a starting point to develop a saving and spending plan that works for you. (Krane Financial Solutions has created a tool called the Saving Spending Accelerator to help you keep track of these two areas ™). Now prioritize your discretionary expenses, making sure you spend money on the things that bring you the most happiness and fulfillment. This may force you to spend less money on some expenses that don’t hold as much value for you, but I think you’ll be pleased with the result.
3. Discover what makes you “You.” It’s so much easier to make the right decisions when they come from your heart. That’s why it’s important to align your personal values with your financial life. Decisions made based on your own guiding principles are usually the right ones for you, so allow your personal values to become guideposts for making financial decisions, if they aren’t already.
4. Don’t let the lack of money you have today get in the way of dreaming big. Think about what you would do if you had all the money in the world. Be honest with yourself, since this can open up many possibilities. You may be surprised to see that things you’ve told yourself are not possible might be, after all! This process can help you identify what you really do want, and help you plan and clarify your financial goals.
5. It’s OK to make a lot of money. Some of us were raised with the belief that making gobs of money turns us into bad people, but it you tap into your unique talents and serve people with what you do best, you will be really authentic, and your business will explode. That sounds like a good thing, right? You need to believe that it is OK to be successful, to create abundance, wealth, and financial freedom for yourself.
6. Grow your revenue by becoming keenly aware of your clients’ and prospects’ needs. Survey your clients and prospects and ask what their biggest problems are — then develop programs that address these specific areas. Create different programs at different price points that give them a wide range of choices for how they can work with you.
7. Write down your goals and invest to reach them. This could be the biggest no brainer of all time, when it comes to financial planning! So many of us invest and forget why we are investing in the first place. Identify a goal, make it specific and vivid for you, and then invest to reach that goal.
8. Ask your Financial Planner how much risk you need to take to reach your goals. Once you identify your goals, your financial planner can construct a portfolio that could try and deliver a return that will enable you to reach them. You may or may not need to take as much risk with your portfolio as you are currently taking.
9. When it comes to investing, you need to own different things that don’t move in tandem. You want some investments that zig and zag. These are called “asset classes.” Some examples of asset classes are stocks, bonds, real estate, and commodities. Diversification of your investments is one of the most financially healthy things you can do.
10. Don’t be “house poor,” so you can shop, do dinner with friends, and travel. Spend no more than a maximum of 28% of your gross income on your mortgage, property taxes, and homeowner’s insurance.
11. Evaluate how you feel about your current job and career path. Ask yourself if they provide you with the lifestyle you want. If not, it may be time for you to consider making a transition to a career that leads to a happier, more fulfilling life.
12. Choose a financial advisor who’s right for you. When interviewing a financial advisor, observe the way he or she gets to know you and note the questions you’re asked. This will give you some insight into their belief system and help you determine if their approach is right for you.
13. Get clear on the types of services your financial advisor offers. Some will give you investment recommendations, but Certified Financial Planner ™ professionals may offer a more holistic approach when delivering financial advice – one that identifies your goals and provides a plan for reaching them. This is what goal-based financial planning is all about.
14. Encourage your accountant to be proactive and offer suggestions to reduce your tax liability. Are you entering your receipts into QuickBooks by yourself? Get a bookkeeper and delegate that task immediately! Focus on your unique ability which will make you more productive in your business.
15. Cover your tush and buy disability insurance. Disability insurance provides you and your family with a stream of income if you become disabled. This insurance could really save your financial life, in case of an emergency.
Above all, stay positive, focused, and use your passion to make 2011 your year!
Justin Krane, a Certified Financial Planner, founded Krane Financial Solutions in January 2008. He holds a Bachelor of Arts degree in Finance from University of Colorado, Boulder, graduating in 1994. Prior to founding Krane Financial Solutions, Justin was a Vice President, Investments, and Sales Manager at UBS Financial Services Inc. for 12 years, in Beverly Hills, California. For more information, visit http://www.kranefinancialsolutions.com/.
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