Now is the time of year when people step back and consider where they stand and how close they are to achieving long-held goals. No matter what your objectives, a sound financial plan will put you in a better position to achieve them, according to the Pennsylvania Institute of Certified Public Accountants.
Make a List
When you write down your dreams on paper, you’re one step closer to making them a reality. In addition to short-term goals, such as purchasing a car or starting a savings plan, don’t be afraid to include more ambitious ideas, such as a new home purchase. Once you’ve made your list, try to construct a realistic timeline for achieving each one. While there may be set dates when you’ll need college tuition money or retirement savings, other goals, such as the purchase of a new home, may not have clear deadlines. If, for example, you give careful consideration to whether it might be realistic for you to take on a mortgage in five years, it’s easier to create a budget that will help you make that dream come true.
Plan to Save
If you don’t already have a monthly budget, now’s the time to determine how much money you spend each month, how much is required to cover the necessities, and what’s left over. Then decide what you can save every month toward your goals. If the amount you need to meet your objectives is too high, reconsider your timeline or your goals. You’re more likely to think your goals are impossible to reach, and potentially give up, if your savings plan isn’t realistic.
You’re not going to be able to achieve all your goals at once, so prioritize your list based on each item’s importance and your timeline. If cutting your credit card balances is on your list, it should be a high priority. That way you can stop spending money on interest payments. Remember, some goals that feel far away may still need to be a top priority. Although retirement may be a long way off, for instance, the earlier you set up a tax-advantaged retirement account, the larger your nest egg will be later on. Take the First Step
Once you have specific priorities, consider what you can do now and in the future to achieve each one. If you want to save for a child’s college tuition, for example, set up a 529 or other tax-advantaged education saving account. If retirement is on your mind, look into your company’s 401(k) plan or determine whether an IRA suits your needs.
In other cases, it may help to clarify what you really need. If an automobile purchase is on your agenda, consider a used car in good condition rather than a new car that might bust your budget. If you do, that goal might become a little easier to reach.
Your Local CPA Can Help Thoughtful planning can make
many of your financial dreams a reality. If you have questions about the steps discussed here, or about any financial issues, be sure to turn to your local CPA To find a CPA in Pennsylvania by location or area of expertise, visit www.ineedacpa.org.