End Of The Year Financial Planning - The Ant And The Grasshopper

Despite how hard it is to believe, 2014 is almost upon us. Which means everyone is beginning to think about their New Years resolutions. Things like eating healthier, going to the gym more, things like that. Unfortunately we don't always maintain these resolutions. We may mean to, but things happen in life, and we may not have the time or the energy to keep up with it.

But it's during times like this that we should remember the old children's story The Ant and the Grasshopper. The ant worked hard all summer, gathering wheat grains to store for winter. And the grasshopper? He just hopped around, enjoying the sunshine and laughing at that sweaty ant. Well, once winter hit, the grasshopper wasn’t laughing, but was cold and miserable and hungry. And the ant? He had plenty of food and could now toast his toes in front of his warm fire.

The point is, instead of waiting for January 1 to make your next set of New Year’s resolutions, start now working on those you made eight months ago, working on the principle that there is no time like the present. Here are four quick tasks to undertake to get your financial life under control and heading in the right direction. (You’re on your own with the diet and exercising!)

1. Start saving now. Have a set amount of money deducted from your paycheck and sent directly to a “don’t touch no matter what” savings account. Self-employed? Do your own auto-deduction from your checking account. (Bonus tip: save your change and once a month, make a coin drop to your account. Or go even further: Don’t spend those one dollar bills but instead save them. When you get 10, deposit them. It’s amazing how quickly your savings balance will grow!)

2. Review your life, business, auto and home policies. Do you have enough coverage—and the right kind? Can you increase your deductibles to save a few dollars? Do you need to add any extra options, riders or increase existing coverage amounts? Schedule a session with your insurance agent for a complete evaluation of your existing policies.

3. Pull your credit score. Go to one central site where you can request a free credit file disclosure (also called a credit report) once every 12 months from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion. Look for any errors or unexpected information and then get it corrected—ASAP!

4. Create a workable financial plan. Do you know where your money goes each month? Take a look at your income and outgo. Are there expenses you can reduce or eliminate? If so, use the extra money to either pay down debt or save for a rainy day. Consider the “Latte Factor”: the concept that many small purchases can add up to a significant expenditure over time. For example, a $3 coffee five days a week is an expenditure of $780 a year. Settle for a regular cup of joe at half the price, save the rest and, at minimum without factoring in interest, you’ll have $390. Every little bit helps, whether it’s spending more or adding more to your monthly payments.