As we go into the New Year, Emily and I started to make our resolutions for 2016. It didn’t take very long to realize we were thinking about our financial goals and the techniques we were using might be useful for someone else. So rather than give one list, we each wrote our own New Year’s Resolution posts. Emily’s post, focusing on SMART technique goals, can be found here.
Happy New Year! Time to think about those resolutions for 2016. Specifically, I ‘m writing about my financial resolutions for 2016. I have some non-financial goals, like making sure my new hiking boots get some good usage and getting the garage organized, but today I’m going to talk about my short, medium and long term financial goals for 2016.
What do I mean by that? My short term resolutions for 2016 have to do with saving money on weekly expenses, my medium term goals concern saving money on monthly expenses, and my long term goals have to do with investment and business goals.
Short Term Resolutions for 2016
My short term resolution for 2016 is to achieve at least a 10% reduction in several of our weekly expenses.
I’ve been talking about some of the things we began doing in 2015 to reduce our energy expenses, particularly gas and electricity. 2016 is when I’m hoping these changes really pay off. I’m hoping to gain a 10% reduction in gasoline expenses by changing our driving style and maintaining our cars properly. Of course, this may be difficult to achieve if gas prices rise significantly, but maximizing our gas mileage will become even more important if that happens.
It should be pretty easy, though, if gas prices go down.
We’re still in the process of getting a new meter to allow us to participate in the electricity company’s time of use program. Once that kicks in and we shift our electricity usage to take advantage of off peak rates, we should see at least a 10% reduction in electricity as well.
Our food budget also has room for a 10% reduction. We’ve done a good job of cutting back on food waste, but there’s room to save money by going to more meatless meals. I want to institute the New Orleans tradition of Red Beans and Rice every Monday. Delicious, healthy and inexpensive! And, bonus, our daughter will actually eat it as long as I don’t make it too spicy. Now, I just need to find my rice cooker that’s been boxed up since we moved 5 years ago.
Our short term goal has to do with cutting our entertainment budget by at least 10%. Entertainment expenses are discretionary, and we’ve amassed a lot of expenses that need a good hard look: cable, internet, video streaming, satellite radio. I want to leave leeway to still do the occasional trip to the movies, but we’re spending too much in this area and should cut back to free up funds to reach our long term goals.
Medium Term Resolutions for 2016
My medium term resolutions for 2016 is to look for reductions in our mortgage, insurance and non-fuel automotive costs.
I haven’t set numbers to these medium term goals, but I want to try to reduce our mortgages. I also want to make sure that we are getting the best deals for our insurance. I want to take advantage of all of the multi line discounts we can, and look at all of our deductibles.
Non-fuel automotive expense generally includes maintenance and loan payments. We’re fortunate that we own our cars outright and don’t have payments. I can do a lot of our car maintenance, which also helps. But one area I really want to work on is reducing the mileage on our newer car.
Our 2014 Honda Pilot has a 3 year 36.000 mile bumper to bumper warranty. We are starting our third year, and it’s gotten more usage over the last two years than our other cars. We have 25,500 miles on it, and I want to make sure that it goes out of warranty due to time rather than due to mileage. My 2002 Mercury Mountaineer will probably hit the road more this year, particularly for any trip mileage, as we try to make sure we maximize the warranty on the Pilot.
Long Term Resolutions for 2016
My long term financial resolutions for 2016 are to make sure we are maximizing our retirement, college savings, and small business investments in terms of both Return on Investment (ROI) and Return on Equity (ROE).
I haven’t looked at our year end numbers for our investments yet. It was a down year for the stock market. Maybe we managed to beat it, maybe not. We’ll be making a comparison between this year’s numbers and last year’s soon as part of our quarterly balance sheet monitoring. We may have some adjustments to make in the new year.
We started a 529 college savings plan for our daughter a while ago, but now that Little Bit’s in Kindergarten, it’s time to get more methodical about saving for her college expenses. We need to compare where we are to the projected college costs in 12 1/2 years. We probably need to be putting more money aside than we have been and make sure that we’re maximizing the return. I’m positive I beat the market this year by investing the 529 in a fixed income fund, but that may not be the best place for the entire fund.
Finally, we need to do some planning and analysis of our business expenses, income and value. We spent more time on our businesses in 2015, and they are becoming more complicated. We need to look at how their returns look versus the money invested, and how much they are worth in terms of cash flow and assets to determine our best moves for 2016 and beyond. We may have some opportunities for further growth with additional investment, and I want to make sure we’re prepared for those opportunities.
Have a Prosperous New Year!
As we move in to 2016, you can expect some additional focused articles and updates as I tackle my financial resolutions for the new year. We have some incremental and long term adjustments to make, and I hope you’ll join us as we work toward a prosperous new year.
Happy New Year!