Financial Goals to Pursue in ’07

By CHARLES JAFFE MarketWatch

One key way to achieve goals, particularly the financial ones, is to have concrete targets, with measurable numbers and progress that shows up through reasonable effort more than wishful thinking. If you are planning to set financial goals in 2007, here are a few targets worth aiming for over the next 12 months:

Save your next pay raise

If you’re getting by today — even if things are tight — then use some or all of tomorrow’s pay raise to inflate the emergency fund, and to build your retirement plan, employee stock ownership plan or your favorite stock or mutual fund account.

You’re keeping your current standard of living stable, but dramatically improving your future comfort.

Pay the bills on time

Timeliness is the big issue with creditors these days. Paying the minimum on time is much better than making a huge payment that’s three days late, especially if your lender happens to have punitive rates — so that a single late payment carries a penalty far worse than a simple late fee — or a “universal default” clause, which allows a creditor to stick you with higher rates if you make a late payment to anyone, even if you have always been on time with them.

Buy what you need

One of my regular goals is to get rid of the unnecessary stuff cluttering my life. Extend that to the stuff that’s not yet in your life.

If you can’t afford to waste money, don’t let food rot in the fridge while you eat out or leave good clothing lying in the back of the closet while you shop for something new. Add three questions to your buying process: Do I need this? Will I use this? What are the alternatives?

Uncomfortable planning

Most people leave more detailed instructions for the pet-sitter when they take a week’s vacation than they do for their next-of-kin in the event that their next trip detours to the Great Beyond.

Chances are good that you’re overdue for at least one of the following: an insurance check-up, a review of the estate plan, and an update of your will. And while “funeral planning” may sound morbid, determining your final wishes never hurt anybody, and tends to make times of mourning just a little easier on your loved ones.

Hire financial help

If you’re unhappy with your current plan, or spend too much time worrying about it, take charge of the situation by hiring a financial adviser. Help is out there, and the peace of mind it can provide — even if it simply confirms that you’re on the right track — can be wonderfully liberating.

Conversely, if you hired an adviser and your personal worry quotient has gone up since he or she has been on the job, make the person shape up. Outline your expectations and their shortcomings; if the relationship can’t be saved, now is the best time to move on.

Track your spending

If increased savings is one of your goals, get a notebook and track all of your expenses for a month. You may be shocked at what you find (the $1.75 spent on a soda and candy bar during every working day amounts to a $425 a year habit), which could give you some easy motivation to improve the situation and become a better spender and saver.

Increase contributions

There’s an undeniable joy that comes with giving away some of what you work so hard to earn. If you’re healthy, safe and have skirted the weather catastrophes that have dominated the news over the last 18 months, try to increase the amount you set aside for those who have not been as fortunate.

Save time

Save five seconds of every minute of your work day by being more efficient or not procrastinating and you get 40 extra minutes of working time in an eight-hour day. That extra time, whether you use it for work or family, is money in your personal bank.

Keep perspectives

One way you can save time is to cut down on the hours spent watching and managing your investments. That may sound like blasphemy, but it’s easy to spend every waking moment following, measuring and tinkering with your investment portfolio. For most investors, worrying about money minute-by-minute is counterproductive; it convinces people of the need to make a move, even when the best action might be staying the course. That’s not always time well spent.

If you have a carefully crafted investment plan, you don’t need to worry about the market’s next tick. If you don’t, your time is better spent developing a plan than micro-managing investments based on news and noise.

Chuck Jaffe is senior columnist for MarketWatch. He can be reached at jaffe@marketwatch.com, or at Box 70, Cohasset, Mass. 02025-0070.

(c) 2007 Tulsa World. Provided by ProQuest Information and Learning. All rights Reserved.