By: Norm Wilkens
As we begin a new year, it seems to be a custom to reflect on the past and project toward the future. We sum up these items in a simple phrase – “New Year’s Resolutions.” And, with some regularity, we promptly forget our planning for the future and totally ignore the lessons learned during the past twelve months.
Here at the beginning of 2012, may I recommend that this forgetfulness not be the case during the coming year. We all can certainly learn a great deal from our failures as well as from our successes. However, at the outset, let me caution that you should not spend too much time contemplating those unsuccessful plans. Concentrate more on what you did right than what happened on the wrong side of the ledger. You will find that those “right side” successes, if you can duplicate them, will more often create a pattern for achievement in the new year.
One of the toughest assignments for all of us during the recent economic downturn is saving. What can be more basic than putting aside a small amount every month from a paycheck or an investment return? If it’s so simple, then why don’t we do it? Primarily, our daily cash output gets in the way. We all have so many cash demands during each month that when all is finished, we don’t seem to have anything left to put aside. That’s the prime reason for establishing a realistic budgeting process.
When putting together a personal or family budget, first, be honest with yourself and include items you often overlook. For example, you may stop by a drug store to pick up a magazine or a bottle of wine for dinner, perhaps a quick gift item you had forgotten, or doughnuts on a Friday for your staff. We often exclude these and literally hundreds of other items from our budgets because they are not on our “front memory burner” when we plan our budget. To help solve this “non-budgetary” problem, you might simply establish a “catch-all” or “miscellaneous” category and put a hundred dollars or more in each month to cover these kinds of purchases. Believe me, they add up quickly and can throw a monthly budget out of whack quickly.
You should also give careful thought to your larger budget items, such as car loans, mortgage payments, taxes, utilities, medical, insurance, and travel expenses, so that you make sure potential increases that may occur over the year are covered. For example, it’s always good to establish a monthly budget plan for utilities that takes the annual “highs and lows” out of planning.
Next, establish your long term financial goals and not only write them down but also put them where you can see them daily. A good suggestion is to tape them to your computer. What type of goals are you establishing: college education for the kids, a new car, vacations, a special anniversary gift, or a home remodel project? Don’t plan to save the whole amount in a short period. It won’t happen! Space out your savings covering the entire year. Even a small amount, such as $ 100 a month, adds up to $1,200 at year’s end.
Finally, stick to your budget! It’s not an easy task. We have all had grand ideas at the beginning of each year on what we plan to accomplish. However, by February, we have often forgotten those success projections. But don’t beat yourself up; we are all guilty of that! With realistic, annual budgeting you can identify the months that will cause you cash flow problems and plan ahead for those tough challenges.
In 2012, let’s turn the process around and prove to ourselves that we can save for the future and set a goal for success. When you achieve that goal, don’t forget to celebrate, but also make sure you budget for the party!