December is always the month that forecasters ramp up their predictions for the coming year, and in this uncertain economic climate, Americans are more than ever looking for any hint about what the future will bring. While fortune telling is a great way to boost ratings, the typical investor need not be concerned with whether or not Netflix will be acquired or Jamie Dimon will retire.
So what should investors be thinking about as the New Year approaches? Here are 3 Wise Money Strategies to ensure that your finances are in order for 2011 and the rest of your life.
1. Assess your goals for the future.
If you do not know where you are going, you will not know when you have reached your destination. Carefully articulate your financial goals, assess the level of risk you are comfortable with and then make a plan that you are capable of following. If you have identified your goals in the past, but it has been a few years since you have assessed your progress, it is probably time to take another look at how well your financial plan is meeting your goals.
2. Alter your perspective on conspicuous consumption and quality of life.
Of all the lessons this recession has taught us, there is one that consumers should remember even when rosier economic times return- keeping up with the Joneses is never a good reason to go into debt. We all know that material possessions do not correspond into happiness, and yet we continue to buy things that we do not need. Due to the usual suspects of higher taxes, inflation and moderating returns, expect and plan for income compression in the future. Follow the same strategy that successful corporations use to survive tough times; live more efficiently and reduce waste. In other words, think about whether you really need that fancy new gadget or designer handbag before you pull out the credit card next time.
3. Turn off the television.
Avoid being lured into the 24 hour Armageddon media coverage. A pundit’s job is to keep you watching day after day, and they often rely on scare tactics to do it. Tune out the screaming heads and you will stop making emotionally charged investment decisions. Set goals for the future, periodically monitor your progress and then relax!