Yesterday we discussed our personal Financial Resolutions for 2011. A Financial Resolution is a specific financial goal for the New Year that we set along with a plan of action to achieve the goal. Our Financial Resolution should have a specific goal, a defined action plan, and an achievement date. I know it is only January 4, and it may still be early to set our New Year’s Resolutions and Financial Resolutions for 2011; but don’t worry, Green Panda is here to help.
Some common Financial Resolutions could include saving more money, paying down our debt, planning a trip, and buying a home. These are all good goals, but a great goal also has to have a plan of action to help us achieve the goal. In order to create an action plan we need to ask ourselves some questions.
Here are some questions that we should ask ourselves in order to create an action plan, and achieve our Financial Resolutions:
Resolution: To save more money.
Questions to ask:
How much more money do I want to save?
What am I saving for?
What expenses can I cut, and allocate the extra money towards my savings?
How will I save the extra money? Is it best if I save through an Employee Savings Plan with my employer? Or should I set up an Automatic Transfer between my checking and savings account?
Resolution: To pay down our debt.
Questions to ask:
How much debt do I have to pay off?
When do I want to have it all paid off?
How much can I afford to pay per week or per month?
Resolution: To take a vacation.
Questions to ask:
Where do you want to go and for how long?
How much will it cost me?
How much will I need to save monthly?
When do I want to travel? It is best to select a few different date options, and then compare pricing to see which is the least expensive. We also have to consider the exchange rate of our dollar versus the destination country.
Resolution: To buy my first home
Questions to ask:
Do I want a house, a townhouse, or a condo?
How much can I afford? Most financial institution websites have a section with various Mortgage Calculator Tools. These calculators can help us determine how much we can afford to pay each month with our current monthly income.
What amount of Mortgage will I need to borrow? Visit your financial institution and get a Mortgage pre approval. This will give us the price range for our home.
How will I save for my down payment? A down payment is the amount of our own savings that we put towards our mortgage. As a basic example, we want to purchase a house for $250,000, we will have a 10% down payment of $25,000 therefore our mortgage will be $225,000.
It is best to set specific goals with a specific action plan. However, things can always change and we have to be prepared for the unexpected. We may not always be able to stick to our action plan, if we get off track it is ok. We can always revise and reset our action plan in the future.
Tahnya is 30 years old and lives in Montreal Quebec. She graduated in 2005 from Concordia University, and she currently works for a major International Financial Institution. She recently launched http://www.mediamadam.ca/. You can follow her on Twitter @TahnyaP.