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Money Management (01/20/2008)
Sure-fire steps to achieve your financial goals

What are your financial aspirations for the coming year? Would you like to pay off some high-interest debt? Step up your retirement savings? Set aside enough for an exciting vacation? The Minnesota Society of CPAs (MNCPA) recommends that you take several wise steps to turn your financial dreams into realistic goals.

Create a budget

It will be difficult to lower your debt or save for your future if you don't have a clear idea of your current finances and how youíre spending your money. Whether you use a software program or a sheet of paper, set down what you earn and what you spend. In the spending category, include regular items such as rent or mortgage, car payments and other outstanding loans. Next, make accurate estimates about your variable expenses, such as food, transportation, entertainment and clothing. Try to include those easily forgotten expenses, such as the price of takeout lunch at work or stopping for a bottled water or coffee.

Look for red flags

Now that you've listed what you spend each month, consider problem areas. Do you have a high-interest loan or credit card balance? Are you spending a lot each month on take out meals or entertainment? Think about whether you can make better choices. Just because you can afford certain expenses, that doesn't mean you are making the best use of your money. If you change bad spending habits or poor choices, you can preserve your cash and use it more wisely.

Make savings automatic

We all know that saving something each week is a good idea, but we can easily forget to do it. Thatís why itís a good idea to enroll in an automatic savings plan at your bank or a 401(k) plan through your employer. Remember that you don't have to settle for a low-interest savings account. Some mutual funds accept initial deposits of as little as $50 or will even waive the deposit requirement if you agree to save a certain amount each month. Many people aim to save whatever remains at the end of each month but find that thereís little left. When you designate an amount for automatic savings, it becomes a part of your regular budget and can't be forgotten.

Choose realistic targets

Paying off all of your debt is an excellent goal, but it may not be something you can accomplish this year. That's no reason to give up, however. You can make great progress if you set reasonable targets that are achievable and that will also make a difference in your financial life. If you resolve to reduce your debt by 25% this year, for example, you might be in a better position to make a meaningful, positive change in your financial situation and gain the satisfaction of accomplishing a goal.

Monitor your progress

Your aspirations and your financial situation may change as the months go by. As a result, review your goals and your progress toward them at least every six months to see how successful you have been and if you need to make changes in your targets, your savings rate or any other factors.

Ask your CPA for advice

You can achieve your dreams if you understand where you stand now, chart a course toward your goals and take the necessary steps to get there. For these and any other financial issues, be sure to consult your CPA. CPAs have the expertise you need to put your financial picture in focus.

Information and resources are available to the public on the MNCPA Web site (www.mncpa.org/information) including state and federal tax forms and information and financial planning information for individuals and small businesses. A free CPA referral service is also available on the Web site or by calling 800-331-4288. The MNCPA is part of the national 360 Degrees of Financial Literacy campaign to help Americansí improve financial literacy; information and resources are available at www.mncpa.org/360.



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