Resolution 1: Create a budget for life
When it comes to finances, life can be viewed as cash flowing in—and out. Saving and investing during your working years, if you stick with it, could lead to a rising net worth over time, enabling you to potentially achieve many of life’s most important goals. Creating your own budget and net worth statement can help you build your road map and stay on track.
Resolution 2: Manage your debt
Debt is neither inherently good nor bad—it’s simply a tool, if used smartly. For most people, some level of debt is a practical necessity, especially to purchase an expensive long-term asset to pay back over time, such as a home. However, problems arise when debt becomes the master, not the other way around. Try to keep the monthly costs of owning a home (principal, interest, taxes and insurance) below 28% of your pre-tax income and your total monthly debt payments (including credit cards, auto loans and mortgage payments) below 36% of your pre-tax income. Eliminate high-cost, non-deductible consumer debt. Try to pay off credit card debt and avoid borrowing to buy depreciating assets, such as cars. The cost of consumer debt, if you carry a balance, adds up quickly.
Resolution 3: Optimize your portfolio
We all share the goal of getting better investment results. So create a plan that will help you stay disciplined in all kinds of markets. Have a targeted asset allocation—that is, the overall mix of stocks, bonds, and cash in your portfolio—that you’re comfortable with, even in a down market. Make sure it’s still in sync with your long-term goals, risk tolerance and time frame. The longer your time horizon, the more time you’ll have to potentially benefit or recover from up or down markets.
Donald Daigle is an Independent Branch Leader and Financial Consultant at Charles Schwab with over 29 years of experience helping clients achieve their financial goals. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.
Investing involves risk. Diversification strategies do not ensure a profit and do not protect against losses in declining markets. This information is not intended to be a substitute for specific individualized tax, legal, or investment planning advice.
Charles Schwab & Co., Inc. (Member SIPC)
Don Daigle
Branch Leader
2184 North 2nd Street
Millville, NJ 08332
856-506-3412
Get Started at schwab.com/vineland-millville
