We're halfway through the year, and it's time for a fiscal checkup. Just as you do with your annual physical, you need to determine if your budget is healthy or if expenses are bleeding enough red ink to cause anemia. Are you shedding pounds of debt or are you over-stressed ? Will you reach your goals for savings in 2013? Will you have enough to spend on splurges or holiday gifts?
Like the familiar, "I'm going to lose 10 pounds," New Year's resolution, you probably set some fiscal goals for 2013, like to pay down debt on credit cards or loans, save for retirement or a big purchase such as a house, car or vacation, build an emergency fund or, maybe, just something as simple as "save more."
To examine your current financial health is going to take more than confirming you have money in your checking account. We hope you are using some sort of online tool or budgeting software. If not, you need a complete physical.
This won't hurt much
Amy Fidelis, marketing and education director at Mpowered, a local nonprofit that counsels people on money management, says, "You wouldn't measure your physical health by only taking your blood pressure. You'd expect a full workup — check your cholesterol, body mass index and vision. It's the same for a fiscal checkup. If you haven't kept track of income and expenses, then pull out all your bank statements and credit card bills. Poke into all your accounts: CDs, IRAs, college funds, retirement funds and tax returns."
Calculate what you have spent so far this year and use that to figure out how your future looks. Are you still on target? Has anything changed? Did you buy a car or a house? Do you have enough insurance coverage?
Just as an overeater may have to record every calorie, try tracking every expense, no matter how small, for at least one month. Then review your spending to see where the money went. Why didn't you save? What blocked your success? Says Fidelis, "Sure, you buy gum at the gas station, but maybe it's those lunches with co-workers that blow your budget."
Are you meeting your goals? If so, consider paying off even more of your credit card debt or pumping up that emergency fund. Maybe even prepare for the holidays by buying that perfect gift when you see it, even if it's July instead of December. Speaking of December, you need to be prepared for the rest of 2013, so don't tie up your funds in long-term CDs or clean out your accounts and get caught short. Winter in Colorado means preparing your vehicle and planning for rising heat costs.
If you're not on track, don't beat yourself up, says Joseph Clemens, a certified financial planner in Denver. A budget is just a general plan for future spending. If you are off a bit, there's still plenty of time for a fix without major surgery.
Here are eight tips for improving your fiscal health.
1. Re-envision the dream. See it, touch it, feel it. Get yourself emotionally back on track, says Helen Gibson, vice president of marketing and education at the Denver Community Credit Union. For instance, if your goal is to save enough cash to build a garage, envision yourself getting into the car without having to scrape off ice on a freezing Colorado morning.
2. Form a dream team. Ask family, best friends, a financial planner, credit counselor and others who support your goal to join.
3. Get real. Re-analyze your goals so you have a better chance at success. "Say you drop by Starbucks every day and spend $5 on that cappuccino — maybe cold turkey isn't the answer," says Gibson. "If buying the coffee gives you joy, then try to set a weekly limit."
4. Pay yourself first. Have your bank or credit union automatically transfer money from your paycheck to a savings account. Out-of-sight, out-of-mind really does work.
5. Get personal. See if your bank will allow you to have sub-accounts. Name each one after a goal — Freedom, What If Something Goes Wrong, Vacation, Dream Home — and then watch them grow.
6. Erect road blocks to excess spending. "Put credit cards in a sealed envelope and stick them under your spare tire," says Carol Craigie, a certified financial planner and professor for the College for Financial Planning. "You'll still have them in an emergency, but if you have to drag them out for a pack of gum at the gas station you are going to think twice." Or, write down your goals (such as, "Happiness is having enough money to pay for my kids to go to college") on a sticky note and wrap it around your credit card so you see it each time you pull it out.
7. Make it fun. Counting pennies, like counting calories, is a drag, so plan ways to reward yourself. Suggests Craigie, "Find someone and stage a contest to see who can pay off their credit cards first." Sign up with creditkarma.com, which shows your credit score for free. "If you check it every so often and see that number rising, it's a great feeling," says Clemens.
8. Seek professional help. Sometimes you just can't perform surgery on yourself. If your budget is on life support, sit down with a credit counselor or financial planner. While many offer their services for free, Clemens recommends hiring one that charges just enough that it hurts a little, so you have an incentive to follow the advice and program.
It's never too late to gain control of your fiscal health. Just don't let it turn into your 2014 New Year's resolution.
According to a Harris Interactive Consumer Financial Literacy Survey, only two in five adults say they have a budget and closely track their spending. Here are some free online tools that can help get your budget fiscally fit.
'¢ Mint.com — Helps organize and categorize your spending, sets budgets and goals. Sends e-mail alerts if you exceed any budget area and/or if you receive or pay any large amounts.
'¢ Yodlee.com — View and manage all of your accounts, track income and expenses.
'¢ Powerpay.org — Helps you create a plan to become free of debt, project savings and compare your savings options.